What is driving the SmileDirectClub Inc (NASDAQ: SDC) stock

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SmileDirectClub Inc (NASDAQ: SDC) stock surged 21.60% on January 6th, 2020 (Source: Google finance) after the company announced its plan to sell oral care products exclusively in 3,800 Walmart stores in the U.S. and online (Walmart.com). The Walmart deal do not yet include the company’s main product, the clear aligner. SmileDirectClub has already made the non-exclusive distribution deals with both CVS and Walgreens Boots Alliance for its aligner product. The deal with Walmart will help the company to introduce the company to all of Walmart’s customers, which will give the first-mover SDC a big advantage over its competition. Further, The launch and partnership with Walmart, a major retailer, increased the investor’s confidence as the company had weak start when it had bad listing in September 2019.

The products that will be available in Walmart includes the electric toothbrush ($24.98), bright on premium teeth whitening kit ($39.98), Toothpaste, its whitening and sensitivity varieties, Water flosser and smile spa are the products that have been made available by the Company at Walmart/Walmart.com. The three additional products, teeth whitening and sensitivity toothpaste varieties, a water flosser and an ultrasonic UV cleaner is planned to be launched later this quarter. The Company has introduced two additional items that will be available only at SmileDirectClub.com – Club edition electric toothbrush ($29) and Electric toothbrush replacement head subscription ($5/refill).

Meanwhile, for FY 19, the company expects revenues to be in the range of $750.0 million to $755.0 million, which represents the growth of 78% year-over-year at the mid-point of the range. The Adjusted EBITDA for the fiscal year is expected to be between $(73) million to $(80) million.

Moreover, the company for the third quarter of 2019 had reported 50.6% increase in the total revenue over the third quarter of 2018, to $180.2 million. The company had reported the third quarter net loss of $(387.6) million and third quarter Adjusted EBITDA of $(45.2) million. During the third quarter 2019, the unique aligner shipments had increased to 106,070, compared to 72,387 in the third quarter of 2018. Average aligner gross sales price (“ASP”) has risen to $1,788 compared to $1,773 in the third quarter of 2018.

On the other hand, 21 of the consumer “class” plaintiffs under the Ciccio class action complaint have voluntarily withdrawn their claims, which means the company is left with only one plaintiff in court and one that has been sent to arbitration.

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