Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Naked Brand Group Stock Spiked Today

By Joe Tenebruso - Apr 9, 2021 at 5:33PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An activist investor took a large stake in its business.

What happened

Naked Brand'(NAKD) stock price rose Friday after the swimwear and intimate apparel company said that Ault Global Holdings had purchased more than 41 million of its shares. By the close of trading, Naked Brand was up 2.2% after rising as much as 24.2% earlier in the day.  

So what

Ault Global bills itself as a diversified holding company that invests in "undervalued assets and disruptive technologies with a global impact." It often takes an activist approach. "We purchase companies we believe we can operate more effectively than incumbent management," the company says on its website. 

A stock chart rises sharply and then begins to fall.

Shares of Naked Brand rose sharply Friday before pulling back. Image source: Getty Images.

Ault Global's shares give it a 6.4% stake in Naked Brand. It's unclear if the investment firm intends to propose strategic initiatives to Naked Brand's leadership team or plans to take a more passive approach.

Now what

Naked Brand's stock got caught up in the trading frenzy in so-called meme stocks earlier this year when traders hyped up certain companies on social media sites like Reddit in hopes of driving up their prices. From its lows near $0.07 in November, Naked Brand's shares soared as high as $3.40 by late January, before surrendering much of those gains. 

Management took the opportunity to sell shares to investors, raising $270 million in the process. That allowed Naked Brand to pay off all of its debt and bolster its cash reserves. The company intends to use this newfound cash to accelerate its transition from brick-and-mortar stores to a fully online business. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Naked Brand Group Limited Stock Quote
Naked Brand Group Limited

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.