The SmileDirectClub Inc (NASDAQ: SDC) stock price fell 61.18% yesterday after filing for Chapter 11 bankruptcy protection and securing $20 million in debtor-in-financing funding from its founders to remain afloat as it engages in a marketing process for the rest of its shares.
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The company has had a tough time since its 2019 IPO, where it had priced its shares at $23 each. However, the company’s shares opened trading on the NASDAQ at $20.55 on the first trading day and ended the day down 11%. The SDC stock has never garnered any positive momentum and has fallen significantly since its IPO.
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SmileDirectClub stock was trading at just over 12 cents today, falling drastically from its IPO price of $23. The company’s future is not promising as it had a series of past missteps as it sought to expand from its original clear aligners product, which is an excellent substitute for metal braces.
The company had tried to expand its services to include teeth whitening, overnight retainers, and lip balm but faced stiff competition for clear aligners with Invisalign maker Align Technology. SDC recently lost a court battle with Align Technology regarding its clear aligners and was asked to pay Align Technology $63 million..
SmileDirectClub intends to appeal the trial court’s decision. If it does succeed, Align Technology would be liable to cover the company’s legal costs, including any bonds that SDC might have to post during the appeals process.
SDC’s Chapter 11 bankruptcy process is expected to be brief as the founders market the company’s shares to unlock the additional $60 million in funding for the firm. The company would then become private after the disposal of its equity through the marketing process.
SmileDirectClub had long-term debts worth about $850 million, with its market cap falling from $163 million before filing for bankruptcy to about $65.52 million and lower after filing for bankruptcy protection.
The main problem with SDC’s business model was its choice to market directly to consumers instead of selling its products through orthodontists and dentists. On the other hand, Align Technology chose the right path by marketing its aligners through orthodontists.
Right now, investors could wait for the founders to offer them better prices, but this might not happen.
SmileDirectClub (SDC) stock price.
SmileDirectClub (SDC) stock price plunged 61.18% yesterday and was trading down 21.79% premarket.
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