Similar to other “meme stocks,” Naked Brand Group (NASDAQ:NAKD) stock surged in late May and early June.

This latest wave didn’t last long, but the “Reddit army” of retail traders came back with enough force to send the aspiring e-commerce play’s shares from around 50 cents per share, up to around 75 cents per share. It will open this morning around 70 cents.

Should you consider it a “buy the dip” situation at those levels? Not so fast. Even as it moves lower yet again, and remains far below the highs it made during the first “meme stock wave” (as much as $3.40 per share), this factor is still keeping the stock inflated, relative to its likely prospects.

While the company’s ambitious move away from bricks-and-mortar stores, and focus now entirely on e-commerce, gives it a path out of its current penny stock status, betting on its turnaround is a long-shot wager at best. This especially is true given the hurdles it needs to overcome.

This company’s big-time plans are going to take time. In the interim, shares could continue to fall as the “meme stock” trend enters the history books.

Barring yet another wave of mania, those bullish on its chances may be able to enter a position at a much lower price, several months down the road.

NAKD Stock and the Next Big e-Commerce Play

If you missed the boat on some of the small-cap e-commerce stock success stories of recent years, like CarParts.com (NASDAQ:PRTS), a play like Naked Brand may look tempting. Buying now, you can get in on the ground floor, as it scales up its operations.

If it finds success shares could go on an epic run, like the one PRTS stock has been on since 2019.

Yet, in the case of NAKD stock, the shift to e-commerce pure play may be too little, too late.

For starters, it’s kicking this off well after the mother of all tailwinds: the Covid-19 pandemic and the “stay-at-home economy” it created. The outbreak was a key driver of CarParts’ zero-to-sixty success.

Also, while CarParts found success despite its small size relative to rivals like Advance Auto Parts (NYSE:AAP), AutoZone (NYSE:AZO), and O’Reilly Automotive (NASDAQ:ORLY), the situation may be different with Naked’s attempts to expand in the intimate apparel market.

Generalists like Amazon.com (NASDAQ:AMZN) can likely beat it on price. The economic moat surrounding L Brands’ (NYSE:LB) Victoria’s Secret brand could limit Naked’s potential as well.

Victoria’s Secret may be waning in popularity, but its own dramatic shift in marketing strategy could help it continue to make a comeback.

In short, Naked Brands’ odds of becoming a major online intimate apparel retailer are long-shot at best. It may be best to wait until it loses the rest of its “meme stock premium.”

It’s Cheaper Now, but Not Cheap Enough

Compared to its current operations, NAKD stock looks pricey.

It currently sports a $501.7 million market capitalization. After deducting the $270 million in cash on its balance sheet (the result of secondary offerings earlier this year), that gives the company an enterprise value of around $231.7 million. But, that’s still out of whack with the current size of its operations.

As InvestorPlace’s Will Ashworth recently wrote, its flagship Frederick’s of Hollywood unit generated just $23.2 million in digital sales last fiscal year.

Putting it simply, at today’s prices you are paying a big premium for exposure to this company’s (long-shot) chances of starting to give Victoria’s Secret a run for its money.

Why are shares so pricey despite the company’s uncertain prospects? It has eroded substantially since the winter, but there’s still an ample “meme stock premium” being factored into its price.

Investors who trade more on momentum than on fundamentals, continue to hold this, hoping that yet another wave of madness will send it back toward its past highs.

But, as it becomes more and more clear that this phenomenon isn’t set to repeat itself once more, these fair-weather investors will jump ship.

Once this happens, shares stand to fall towards a valuation equal to its outstanding cash. Based on its outstanding share count (781.7 million), that’s around 35 cents per share.

Bottom Line: No Need to Rush Into Naked Stock

Once the latest wave of speculative mania wraps up, more likely than not Naked Brand is heading lower from here.

That’s bad news for traders looking at this as a short-term trade, but if you have a longer time horizon it may be a gamble worth taking as long as the price is right.

An opportune entry point for NAKD stock may soon emerge. But, while the “meme stock premium” remains priced-in, it’s best to stay away.

On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Thomas Niel, a contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.