What happened
Shares of Naked Brand Group (NAKD) dipped 12.7% in May, according to data from S&P Global Market Intelligence. There wasn't much business-specific news for the company last month, but speculative stocks faced selling pressure in the period, and its share price fell in conjunction with the market trend.
The intimate apparel and swimwear retailer's stock has made explosive gains this year, thanks in large part to its meme-stock status and hopes that a turnaround effort might power an even bigger comeback. Naked Brand Group is a penny stock and prone to volatile trading, and last month's double-digit pullback looks unremarkable in the context of recent and historical swings.
Image source: Getty Images.
So what
Naked Brand is aiming for a turnaround. The company's stock has plummeted because of collapsing sales, mounting losses, and obscene levels of stock dilution following new share offerings being used to raise funds and keep the company afloat. Despite the challenges at hand, the stock surged this year after garnering attention from Reddit's WallStreetBets discussion board and receiving an influx of support from retail investors.
Naked Brand is still up big on the year, but the business will probably have to show some tangible signs of progress if the stock is to make sustained gains above the current price level. There's little visibility into whether the company will make real progress on that front, and it's not surprising that Naked Brand stock sold off last month as investors moved out of highly growth dependent, or otherwise speculative, names.
Now what
Naked Brand stock has bounded back early in June's trading. The company's share price has climbed roughly 12.8% in the month so far.
Naked Brand stock closed the first week of June trading at $0.70 per share, and the company's market capitalization sits at roughly $544 million. With the company currently trading at less than $1 per share, it's in danger of being delisted from the Nasdaq exchange, and management could pursue a reverse stock split in the near future.
In the current age of meme stocks, it's within the realm of possibility that Naked Brand enjoys another big surge, but shareholders could just as easily (or more easily) get crushed with this one.
