Naked Brands Group (NAKD) Stock Slips Below 70 cents: What to do Now?
4:01 pm Thursday, June 17th, 2021
The Reddit fuelled rallies in different unheralded stocks earlier this year remains one of the more remarkable events in Wall Street history and one of the stocks that had enjoyed a massive rally at the time was that of intimate apparel company Naked Brands Group (NASDAQ:NAKD).
However, investors need to take a closer look at the company’s business before making up their minds one way or another. The company had acquired the brick and mortar lingerie store chain named Bendon back in 2018. However, Bendon did not prove to be a success, and earlier this year, Naked Brands decided to divest from its interest in Bendon.
However, this has opened the path for the company to embark on a new asset-light business plan and the bigger thrust is now towards the e-commerce business. The company’s e-commerce strategy is currently centered on Frederick’s and Naked Brands is selling its products after having acquired a license from the Authentic Brands Group. That being said, it should be remembered that the company is currently looking to acquire e-commerce based companies that are operating in this particular industry. Despite the company’s poor performance in recent times, investors need to note that Naked Brands is currently a cash-rich business.
At the end of January 2021, the company boasted $65.5 million in the form of cash and securities. The company managed to boost its cash balance by selling some of its stock at the height of the Reddit fuelled rally earlier this year. However, the stock price remains depressed at this point, and in addition to that, the company will also have to regain compliance by getting its stock price over $1 levels for 10 consecutive days by October 25, 2021. The company might opt to go for a reverse stock split but that is unlikely to solve the issue at hand. Hence, due to these uncertainties, investors could do well to sit on the sidelines when it comes to the Naked Brands stock.
