What happened

Shares of Naked Brand Group (NAKD) gained roughly 8.9% in Thursday's trading, according to data from S&P Global Market Intelligence. The stock has been gaining ground thanks to news of an impending merger and was up as much as 11.6% in the daily session. 

Naked Brand made a regulatory filing on Aug. 20 announcing that it had entered into a preliminary merger agreement. There's not much information currently available about the upcoming partnership or acquisition arrangement, but the pending arrangement is powering big gains for the company's share price. 

People shaking hands.

Image source: Getty Images.

So what

Meme stocks saw mixed trading Thursday. GameStop climbed roughly 2.3% in the session, while AMC Entertainment's share price dipped 7.3%. Naked Brand's gains appear to have been primarily driven by excitement surrounding the company's upcoming merger or acquisition plans.

Naked Brand has yet to announce what company it plans to merge with, but management has said that its partner is "in a sector which has been forecast to have strong growth for many decades to come." Details about the upcoming M&A deal are scarce, but investors are betting that it could power significant gains for Naked Brand stock. The company's share price is up roughly 38% over the last month alone. 

NAKD Chart

NAKD data by YCharts

Now what

Naked Brand Group has a net cash position of roughly $270 million, but its recent business performance has been weak, and significant challenges remain. Despite recent gains, Naked Brand's share price is down roughly 99.8% over the last three years. The company now has a market capitalization of roughly $672 million, and future stock performance will likely revolve around meme momentum and emerging news about the company's merger deal.