SmileDirectClub officially takes the (dental) crown as the worst IPO of 2019

In a year of lackluster IPOs, SmileDirectClub takes the cake as the worst after losing 60% of its value in a month due to new regulation.


October 18, 2019

SmileDirectClub

SmileDirectClub’s shares took a dive this week after California Gov. Gavin Newsom signed a law that gives his state oversight into all dentistry operations that occur there. 

Now, the company’s stock is down almost 60% since it went public in September. 

An orthodontist-shaped cavity

Quick minty refresher: SmileDirectClub brings orthodontia to your home, minus visits to a dentist’s office. The company says its model lets it work on customers’ pearly whites at a fraction of an orthodontist’s price. But some state regulators have expressed doubts about the safety of direct-to-consumer dentistry. 

Now, California — a trendsetter in state-level consumer protection policy — says before any dental work can go down, a real, live dentist has to check out patients’ X-rays. SmileyD says the law will turn its smile upside down — and increase its cost of doing business in the Golden State. 

ICYMI, it’s been a bad year for unicorns

Most big-company IPOs have seen their share prices deflate significantly after going public. One reason: Many of these businesses (Blue Apron, Peloton, Lyft) are tech disruptors. 

When they were private companies, idealistic pitches and overuse of words like “synergy” could translate to billion-dollar valuations. In the real world, the comparatively skeptical public pulled those valuations down. 

Now, SmileDirectClub’s Californian root canal — and the increased focus on reining in big tech — might be an indicator of the next problem these young companies will face: government regulation.

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