The Naked Brands Stock Turnaround Story Isn’t Just Fiction, It’s Fantasy

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The stock market menu offers potential investors shares in many companies, some very expensive and others dirt cheap. When a company’s stock is cheap, often it’s a signal to be wary. In the case of  Naked Brand Group (NASDAQ:NAKD) and NAKD stock, it’s a signal to move along.

Despite the Temporary Pop, Naked Brand Stock Needs a Miracle to Stay Afloat

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That’s move along, as in keep going folks, there’s nothing to see here. Ignore the chalk outline on the pavement.

Move along, the storm clouds are building on the horizon and you need to take shelter.

Just move along.

A Closer Look at NAKD Stock

Based in Australia, Naked Brand Group sells swimwear and intimate apparel. The company was founded in 2009 and merged with Bendan Group Holdings about nine years later. It handles 11 brands.

The company says its products are sold in 44 countries.

Of interest to a potential investor, a share of the company isn’t worth very much. NAKD stock is trading for about a quarter. For a buck, you’d get four shares and a few pennies for your pocket.

Let’s be clear. This is not a turnaround story where a penny stock is climbing from the pit, where an aggressive investor can take a risk on a possible upside. Nope. This is a story where a penny stock is justifiably trading for a handful of pennies.

In fact, NAKD stock hasn’t been all that costly for some time. It’s highest price in the last 52 weeks was $6.96, which put it a bit above the penny-stock threshold of $5. These days, though, shares are trading fairly close to the 52-week low of 20 cents.

The company’s stock basically has been on a slide since October 2019.

During the fiscal year ending in January, the company lost $33.9 million, which comes to a loss of $22.58 per share. That’s a lot of money. That’s before the novel coronavirus knocked the knees out from the retail economy.

Action by Nasdaq

NAKD stock is traded on the Nasdaq – at least for now. Even a casual market observer would wonder how a stock with this history could meet requirements to be bought and sold on the same exchange as Apple (NASDAQ:AAPL).

Naked Brand Group indeed is on the radar of Nasdaq officials.

On July 8, the company announced that Nasdaq gave the company more time to “regain compliance with minimum stockholder’s equity requirement for continued listing on Nasdaq.”

Naked Brand Group now has until Nov. 20 to prove it meets Nasdaq’s minimum. If it does not satisfy officials of the exchange, NAKD stock will be delisted.

This is a big deal.

Investors looking at stocks on a mainstream exchange can have some confidence they are not swimming alone with the sharks. Delisting would be a gigantic red flag to potential investors to avoid this company and buy shares of another company.

The Bottom Line on Naked Brands

That red flag is already waving. At this time, Nasdaq hasn’t yet raised that warning flag on the pole out front, but it sure seems the crew is prepared to do it.

My colleague Thomas Niel recently wrote in InvestorPlace that Naked Brand Group is not a turnaround opportunity for savvy and courageous investors.

“So, why would anyone buy this stock right now?” Niel says. “Naked speculation, pure and simple.”

Speculation has a place in investing. It is a risky endeavor with no guarantee that the shares of a company you buy will not become less valuable. Obviously, the hope those shares will increase in value and help pay for a child’s education or make retirement years more comfortable.

But there’s speculation, and then there’s speculation. And unless executives of Naked Brand Group can pull a rabbit out of that hat, and then document that the rabbit is real, then this is not the kind of speculation I can recommend at this point.

In the meantime, avoid shares of NAKD stock.

Just move along folks.

On the date of publication, Larry Sullivan did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.

Larry Sullivan is a veteran journalist in Florida who has covered banking and finance for several years. He is a former investing editor at U.S. News & World Report in Washington D.C.

Larry Sullivan is a veteran journalist in Florida who has covered banking and finance for several years. He is a former investing editor at U.S. News & World Report in Washington D.C.


Article printed from InvestorPlace Media, https://investorplace.com/2020/09/nakd-stock-turnaround-story-fantasy/.

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