Is Naked Brands (NASDAQ:NAKD) Ready To Hit $1 Soon?
5:02 pm Tuesday, May 18th, 2021
Earlier on this year, a historic and remarkable new trend emerged in the stock markets. Retail investors from the Reddit community WallStreetBets started targeting penny stocks which had considerable short interest and went for short squeezes.
The stock prices soared despite there being no fundamental reason for such gains and one stock that had been one of the targets was the intimate apparel retailer Naked Brands (NASDAQ:NAKD). Back in 2019, the company had actually produced impressive results but it is necessary to note that Naked Brands had never actually generated positive cash flow. However, that did not stop the retail investors from the famous Reddit community from backing the Naked Brands stock.
The rally in the stock following the short squeeze from WallStreetBets was nothing short of remarkable. The stock went from trading at 22 cents a share to $3.40 a share. However, the party did not last for long as investors started moving away from the stock.
The Naked Brands stock could not hold on to those enormous gains and it soon fell away. The stock is now trading at 57 cents a share, but at the same time, it commands a market cap of as much as $370 million.
However, there was one positive for Naked Brands from out of this whole thing. The company’s management was smart enough to sell some of its stock during the massive bull run and managed to add more than $200 million in cash to the Naked Brands coffers. The company now claims to be move into the e-commerce space in a big way and it has also emerged that it is looking to make acquisitions in order to accomplish that.
The cash balance and the new direction are possibly two of the reasons why the stock has not collapsed completely. However, it is fair to say that investors could consider sitting on the sidelines with regards to the Naked Brands stock at this point.
