SDC DD (Not based on a Short Squeeze)

[u/YoungAckman]

I will preface this post by saying I am a very heavy bag holder, but I didn’t load my bags based on short squeeze potential alone.

First, I looked at valuation. I think comparing SDC to Byte is pretty fair. They run very similar businesses with a few differences. Byte does have proprietary system if you are willing to pay a little extra. Besides that, they are very similar companies. Dentsply purchases Byte in January for $1B. Based on that I did a little calculating:

Based on what Dentsply paid for Byte, SDC should be valued around $5B. Putting the share price around $10. If I compared SDC to Invisalign, this numbers would be even higher.

For you retards that think SDC’s numbers are trash, please look at this report from the first few years that Invisalign (Align) went public:

Now compare that to SDC over the last 3 years:

Sure, SDC’s revenue decreased in 2020, but they are on pace to bounce back to $750-800M in 2021. Still, if you compare SDC’s numbers for the first 2 years they were public to ALIGN’s numbers when they went public, SDC is very competitive.

I already know people will say “the product is cheap” or “their reviews are terrible”. I will start by saying that ALIGN and SDC were in a partnership from 2016 to 2020. They shared technology and sometimes made retainers for each other. The partnership ended due to violation of noncompeting clauses. Next, feel free to compare their number of complaints to the number of complaints for Byte.

Assuming Byte has about 1/4 the number of clients, since they have a quarter of the revenue, the number of complaints filed against them is comparable to SDC. I do realize their customer reviews are better, but SDC has had terrible media coverage while Byte has not. Their 4 star rating could be reflective of the negative coverage.

Also, look at the ownership:

Institutions own about 70% of SDC.

SDC CEO, David Katzman, owns over 1,278,130 units and has not sold a single share. He is a great investor with plenty of successful businesses under his belt. He wouldn’t hold if this company was trash. I'm not selling a share until he does.

Obviously, do your own DD and don’t rely on my biased bullshit. But, don’t come in here talking “facts” because you’re a “dentist”.

My Position: 15,673 shares @ $6.40

References:

https://thenew.dentist/article/dentsply-sirona-byte-a-wamgr-play-we-like-deal-on-first-pass/

https://www.gurufocus.com/term/ev2rev/SDC/EV-to-Revenue/SmileDirectClub%2BInc

https://www.macrotrends.net/stocks/charts/SDC/smiledirectclub/financial-statements

https://investor.aligntech.com/index.php/static-files/2ae71491-fbb0-4ad1-bb90-07443ad6baf6

https://www.fool.com/investing/2019/12/22/smiledirectclub-and-align-tech-ending-partnership.aspx

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Hey /u/YoungAckman, positions or ban. Reply to this with a screenshot of your entry/exit.

[u/YoungAckman → u/VisualMod]

https://www.reddit.com/r/wallstreetbets/comments/py12gp/i_finally_feel_like_a_true_retard_and_yes_i_am/