Published on 6 Oct 2022 on Zacks via Yahoo Finance

SmileDirectClub (SDC) Hurt by Lower Spending, Margin Woe

SmileDirectClub’s SDC ongoing operating loss, leveraged balance sheet and tough competitive landscape remain overhangs. The stock currently carries a Zacks Rank #4 (Sell).

Over the past year, shares of SmileDirectClub have underperformed the broader industry. The stock has declined 84.4% compared with the industry’s 13.6% fall. SmileDirectClub exited the second quarter of 2022 with lower-than-expected earnings. The company registered a year-over-year decline in revenues in the quarter due to lower unique aligner shipments. The company also witnessed a drop in both net and financing revenues on a year-over-year basis.

Throughout the second quarter, the macroeconomic challenges continued to impact SmileDirectClub’s core demographic and business spending. According to the company, challenges to consumer spending accelerated faster than anticipated during the quarter. These, combined with reduced stimulus, sustained high inflation and a shift in discretionary spending toward services, will result in less predictable demand curves and lower overall expected demand in the balance of the year. Accordingly, SmileDirectClub reduced its 2022 guidance.