Renaissance Capital is offering a rare sneak peak at our recent pre-IPO report on SmileDirectClub (SDC), normally only available on the IPO Intelligence research portal to institutional subscribers.
After some initial hype, SmileDirect priced above the range at $23, but then plummeted 28% on its first day, the worst first-day return for a billion-dollar IPO in more than a quarter of a century.
When deals price above the range, buying on the IPO is normally a sure-thing: the average first-day gain is +43%, with 97% trading positive. The last time an IPO priced above the range and broke issue on day one was in 2016.
SmileDirectClub earned an Underperform rating on our research report, which we released to clients on September 5. While we gave the company credit for its large market potential, rapid sales ramp, and margin expansion, we were turned off by the company's large losses and questioned its ability to sustain its growth offering a replicable product as numerous competitors joined the fray. SmileDirect was pitched at a clear premium to our group of publicly-traded peers. We were also concerned by various conflicts of interest at the executive level, with insiders getting large cash payouts on the IPO.
Enjoy a free preview of our report on SmileDirectClub. If you work for an institutional investment firm, feel free to contact us to request the full report.
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