Online dentistry startup SmileDirectClub saw its stock price plummet more than 42% on Tuesday to below $0.1 per share. The dip extends the company’s losses incurred last Friday when it filed for Chapter 11 bankruptcy protection.
From a $8.9 Billion Company to Nearly Worthless
Shares of teledentistry company SmileDirectClub crashed more than 42% at the market open on Tuesday, extending last week’s losses caused by the company’s bankruptcy protection filing. The stock traded at $0.09 at the time of writing, down 77.5% since Friday, when the firm filed for bankruptcy.
On September 29, SmileDirectClub filed for Chapter 11 bankruptcy protection, allowing the company to operate while it outlines a plan to repay creditors. Under the terms of its restructuring plan, the firm’s founders will invest at least $20 million to fund the bankruptcy process.
In the filing, the dental aligner company listed $499 million in assets and over $1 billion in liabilities.
The current state of SmileDirectClub is in stark contrast to the heights the company reached in 2019 when it raised $1.35 billion in its initial public offering (IPO). The listing valued the business at a whopping $8.9 billion, turning its founders into billionaires. Now, the recent stock price declines made the company nearly worthless, with its market cap currently standing at just $41 million.
What Stands Behind SmileDirectClub’s Downfall?
Founded in 2014, SmileDirectClub garnered the attention of consumers and investors after introducing plastic aligners that can straighten teeth. The product, which the company sells directly to consumers, stood out at the time because it costs a fraction of the price compared to traditional braces.
However, the demand for the company’s teeth straighteners fell rapidly at the beginning of the coronavirus pandemic. This, coupled with shaky company fundamentals and declining revenues, saw the startup accumulate $890 million in debt over the years.
As a result, SmileDirectClub never turned a profit and even ended up in a legal fight with its competitor and former minority investor, Align Technology, over an alleged breach of noncompete and confidentiality agreements.
This article originally appeared on The Tokenist
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