Story updated with closing price.
DIY teeth straightening company SmileDirectClub’s shares closed at $16.67 on its first day of trading on the public markets, nearly 28 percent lower than its IPO price of $23. The stock opened at $20.55 on Thursday, also below its IPO price.
SmileDirectClub set a price of $23 per share on Wednesday, higher than its initial price range of $19 to $22. The Nashville-based company raised $1.3 billion by selling more than 58.5 million shares before trading began on Thursday.
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The company’s shares, which trade on the Nasdaq, dropped to $20.23 by 12:15 p.m. EST Thursday. The stock was at $16.67 by the close of markets.
SmileDirectClub’s opening day didn’t match its optimistic expectations. That said, the company priced high, meaning that it extracted likely maximum value from its IPO fundraise. That’s good. What’s less good is that the unicorn is starting life off worth less than it, and its bankers expected. The market is saying that they got its pricing wrong, at least in terms of its real, or market-driven worth.
While we wrote this morning that the SmileDirect and Cloudflare IPO pricing runs felt bullish, SmileDirectClub’s first day’s trading blunts the sentiment. Falling as far as the company has on day one is simply bearish.
History
SmileDirectClub raised $380 million in total funding as a private company, and was last valued privately at $3.18 billion, according to Crunchbase. So the company’s public valuation has greatly outstripped its private worth, but trading lower than the set IPO price is far from great.
SmileDirectClub was was founded in 2013, so it reached the IPO milestone fairly quickly. But the company hasn’t been without controversy–its at-home teeth straightening kits have drawn the ire of the dental community, most notably with the American Association of Orthodontists alleging that the company’s service is “illegal and creates medical risks,” according to BuzzFeed News.
In other IPO news, Cloudflare will price this afternoon, and trade tomorrow morning. Datadog and Ping Identity are expected to go public next week. WeWork and Peloton are also working on IPOs.
Illustration: Li-Anne Dias.
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