great article. Fast forward today, the margins are indeed dropping and the word "adjusted" is being used by management in a variety of creative ways. Competition is definitely getting intense.
Glad you wrote about Align Technology. I used Invisalign to straighten my teeth and thought it was a good product. At my last dentist appointment, I asked my dentist what new dental technologies she is hearing about at dental conferences and she included new technology from Align on her list. I researched the company myself and recently started buying a position in the stock. Unfortunately, only the tail end of the purchases happened after that epic 20%+ drop in stock price.
As far as competition goes, one of their biggest competitors, Smile Club Direct, recently filed for bankruptcy.
SmileDirectClub's future uncertain after bankruptcy filing
I would expect at some point here this will increasingly go on buy lists, and there will be renewed bull/bear tug of wars. Align has done a great job, but there's definitely competition. Forget about SmileDirectClub, which still exists... there are the dental product suppliers like Envista (Spark aligners), 3M (Clarity), Straumann (Clearcorrect) and quite a few others, plus at the low end dentists making them in their offices with 3D printers... much the way they can do in-office crowns. I'm under no illusion to think that ALGN will lose its leading marketshare, but as ASPs fall, in response to competition, keep an eye on margins. Best with it, and thanks for the comment.
This demonstrates the ridiculousness of stock price based compensation as the stock price in the short term is more based on emotion and extraneous events more than an individuals management. And it can be the total reverse where a great CEO could be punished for no reason related to his/her skill or management capability ..... I also see stock price based compensation as causing short term decisions that have negative long term impact. This is a RED FLAG -- monty python RUNAWAY situation....
The one thing nobody can control is a stock price, and to your point, incentives based exclusively on stock price can be a motive. That's what such incentives should tied to fundamentals and/or, in the least, have a long tail of a holding period. Also, careful about conflating stock-based incentives with stock-based compensation. ;-)
great article. Fast forward today, the margins are indeed dropping and the word "adjusted" is being used by management in a variety of creative ways. Competition is definitely getting intense.
Great read
Glad you wrote about Align Technology. I used Invisalign to straighten my teeth and thought it was a good product. At my last dentist appointment, I asked my dentist what new dental technologies she is hearing about at dental conferences and she included new technology from Align on her list. I researched the company myself and recently started buying a position in the stock. Unfortunately, only the tail end of the purchases happened after that epic 20%+ drop in stock price.
As far as competition goes, one of their biggest competitors, Smile Club Direct, recently filed for bankruptcy.
SmileDirectClub's future uncertain after bankruptcy filing
https://www.axios.com/2023/10/02/smiledirectclub-bankruptcy-filing-teeth-straightening
I would expect at some point here this will increasingly go on buy lists, and there will be renewed bull/bear tug of wars. Align has done a great job, but there's definitely competition. Forget about SmileDirectClub, which still exists... there are the dental product suppliers like Envista (Spark aligners), 3M (Clarity), Straumann (Clearcorrect) and quite a few others, plus at the low end dentists making them in their offices with 3D printers... much the way they can do in-office crowns. I'm under no illusion to think that ALGN will lose its leading marketshare, but as ASPs fall, in response to competition, keep an eye on margins. Best with it, and thanks for the comment.
Love it!
This demonstrates the ridiculousness of stock price based compensation as the stock price in the short term is more based on emotion and extraneous events more than an individuals management. And it can be the total reverse where a great CEO could be punished for no reason related to his/her skill or management capability ..... I also see stock price based compensation as causing short term decisions that have negative long term impact. This is a RED FLAG -- monty python RUNAWAY situation....
The one thing nobody can control is a stock price, and to your point, incentives based exclusively on stock price can be a motive. That's what such incentives should tied to fundamentals and/or, in the least, have a long tail of a holding period. Also, careful about conflating stock-based incentives with stock-based compensation. ;-)
A historical recap of a company and lessons learned is always appreciated.
Thanks Steve, I always wonder if/how these types of off-the-beaten-path type of things will resonate.
Really good article and a blast from the past!
Thanks, and a blast from many pasts for me!
Great piece!
Thanks!