Shares of Cenntro Electric Group (NAKD), the company formerly known as Naked Brand, were trading lower on Thursday. The former meme stock has been moving steadily lower since mid-November, shortly after Naked Brand -- at the time still a struggling lingerie maker -- announced that it would merge with electric-vehicle maker Cenntro.
As of 10:45 a.m. ET, Cenntro's shares were down about 10.3% from Wednesday's closing price and down about 22.4% since the beginning of 2022.
Cenntro's story is an interesting one. The company is the result of a merger between a small privately held maker of electric commercial vehicles (Cenntro) and a publicly traded maker of lingerie and swimwear (Naked Brand) that became a hot meme stock early last year.
As with many of the meme stocks we've seen over the last couple of years, Naked Brand's business wasn't performing well -- but the company's surprise stock run-up gave management an opportunity. The team raised cash and sought a merger partner, essentially turning the company into a special-purpose acquisition company (SPAC) -- and, like quite a few other SPACs over the last couple of years, it found a small electric-vehicle maker with which to merge.
Cenntro isn't a big company as vehicle makers go. The company hopes to make 20,000 of its electric commercial vehicles this year as it puts the $282 million it raised via the merger to work. But investors should note that as of the end of 2021, it had only made about 3,300 vehicles in its entire history. (For context, Ford Motor Company (F 0.79%) delivered about 8,500 of its Transit commercial vans in the U.S. in December alone.)
That might be why the stock has been falling since soon after the merger announcement: Reality is setting in.
It's not clear what's next for the postmerger Cenntro. The company has announced plans to open a small factory in Florida that it said will begin assembling vehicles by the end of March, but the specifics remain murky -- and as of right now, there's no date set for a fourth-quarter earnings call that might help investors understand exactly what's happening. Stay tuned.