SmileDirectClub teeth aligners
Source: SmileDirectClub

Why Is SmileDirectClub (SDC) Stock Rising, and What’s Its Forecast?

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Sep. 17 2021, Published 11:04 a.m. ET

SmileDirectClub (SDC) stock gained 5.6 percent on Sep. 16 and was even higher in premarket trading on Sept. 17. The stock was targeted by retail traders on the social media platforms, such as Reddit. However, SDC stock is still nearly 63 percent below its 52-week high. What’s the forecast for SDC stock, and how high can it go amid the Reddit-driven short squeeze?

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SmileDirectClub operates as an oral care company. The company provides its customers with an alternative to braces for corrective tooth alignment. SmileDirectClub is mainly involved in the sale of aligners, whitening gel, impression kits, and retainers.

SDC stock is going up

SDC stock is going up despite no company-specific news or analyst upgrades. Instead, meme stock fans and short-squeeze investors seem to be driving its uptrend.

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sdc stock forecast how high reddit squeeze
Source: SmileDirectClub

SDC’s stock forecast

According to MarketBeat, analysts' average target price for SDC stock is $7.78, which is 30 percent above its current price. Of the ten analysts tracking SDC, five recommend “hold,” four recommend “sell,” and one recommends “buy.”

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sdc stock forecast how high reddit squeeze
Source: SmileDirectClub

SDC stock on Reddit

SDC stock is trending on Reddit's investment subreddits, with many people focusing on the stock's rampant price movement. Redditors seem to be split on the stock. Some mentions included rocket ship emojis claiming the stock price will go to the moon, and one poster thinks the stock could reach $11.50 by early October. Others are annoyed that they even bought call options on the stock.

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SDC stock's short squeeze

SDC is now one of the most heavily shorted stocks in the market, and its short interest of 32.74 percent makes it an ideal target for a short squeeze. Retail investors on social media platforms are trying to trigger that squeeze, thereby forcing institutional short sellers to cover their positions as the stock price increases rapidly.

How high can SDC stock go?

SDC stock will continue to surge as long as its short interest stays high. It’s difficult to estimate how high SDC stock could go in the short term, as that depends on investor sentiment. Among brokerages, SDC’s highest target price is $13, which is 117 percent above its current price.

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SDC stock is a good buy

Most of the issues that SmileDirectClub faces should just be temporary, including the economic impact of the coronavirus pandemic and its business disruption caused by a cyberattack. The company’s international expansion into Mexico might soon start to pay off.

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In the second quarter, SmileDirectClub’s revenue grew 63 percent year-over-year to $174 million. Over the next five years, the company intends to grow sales by 20–30 percent per year on average. As the overall adoption of telehealth increases, SmileDirectClub’s teledentistry services should become more popular.

SDC stock has a market capitalization of $2.6 billion, and its NTM (next-12-month) EV-to-sales multiple is 1.1x. SDC faces stiff competition in the dental care market from Align Technology (ALGN), which has a market cap of $57.6 billion and NTM EV-to-sales multiple of 13.1x. Overall, if SDC stock follows in the footsteps of previous meme stocks such as GameStop, more upward gains are likely in the coming weeks.

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