Not a Lot to Smile About With SmileDirectClub Stock

SDC is trading right around $0.50 today

Last week, UBS trimmed its price target on telehealth specialist SmileDirectClub Inc (NASDAQ:SDC) to 50 cents from $1.20. With stocks getting crushed left and right, many investors will flock to penny stocks for a cheaper way to score big profits. Is SDC a candidate for that strategy?

In a word, no. SDC is down 81% in the last 12 months, with its 20-day moving average applying consistent pressure since August. Last seen down 4.9% to trade at $0.49, 

SDC Stock Chart

SmileDirectClub’s bearish form can be heavily linked to its declining revenue. Since fiscal 2019, the company has seen a 32% decrease in yearly revenues. Estimates also indicate that it will end fiscal 2022 with a 24.1% decline in revenue. However, the business is expected to see a 1.1% increase in revenue for fiscal 2023.

Moreover, SmileDirectClub is expected to inch closer to profitability for fiscal 2022 and fiscal 2023. Its earnings are estimated to increase by 0.12 per share for fiscal 2022, going from -0.87 to -0.75, and by 0.11 for fiscal 2023, going from -0.75 to -0.64. Still, the company holds $816.06 million in total debt and only $120.18 million in cash on its balance sheet, making SDC an extremely high-risk play.

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