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There's no overlooking the obvious: Naked Brand Group Ltd. (NASDAQ: NAKD) has had a bouncy few years. From a low of $0.22 per share on Jan. 4 to a previous high of $1,420 in January 2017, the stock has taken tumble after tumble to its most recent dip of $0.59 on Sept. 23.
What gives? Was Naked an unfortunate recipient of the pandemic plunge, temporarily aided by the meme stock craze earlier this year? (NAKD skyrocketed 800% in February due to the "Wall Street Bets / Meme Stock" (WSB) excitement.) Or will it come rip roaring back, offering promise to investors in light of recent company changes?
And in the meantime, as it shapes up, could it remain a boon for active traders and provide several buy-the-dip opportunities?
Let's take a look at an overview of the Naked Brand Group, behind NAKD's success and the NAKD stock forecast for 2025. As stock forecasts go, it's an interesting one - hang on tight.
NAKD Stock Overview
Naked Brand Group, based in Sydney, Australia, touts an intimate apparel and swimwear line. It designs, manufactures, and markets the Frederick's of Hollywood brand under an agreement by Authentic Brands Group.
The company's website highlights its "strong balance sheet, ideally positioned at the forefront of consolidation within the industry." Its website also indicates that the company is looking for opportunities to acquire e-commerce-based operating businesses in intimates and swimwear. NAKD hasn't always been an e-commerce company, however. In fact, just this year, it was previously linked with brick-and-mortar New Zealand company Bendon Ltd.
In its SEC filing on Aug. 20, Naked Brand Group's Executive Chairman, Justin Davis-Rice, put a positive spin on divesting from Bendon in April 2021 so the company could focus completely on a fully e-commerce marketplace. Davis-Rice also announced the company's net cash position of $270 million after repayment of all previous bank debt.
Behind NAKD's Success
The Reddit rally had a lot to do with NAKD's early success in 2021. Benefiting from the momentum earlier this year, a positive Naked stock forecast materialized - a 72% increase.
Naked's announcement about a preliminary agreement with a merger or acquisition partner caused shares to rise, though it didn't name the company. Naked professed that the acquisition partner will put the company in a position and in a sector which "has been forecast to have strong growth for many decades to come."
NAKD Stock Forecast 2025
So, what's the NAKD stock forecast 2025?
E-commerce businesses shouldn't fade into oblivion. In fact, in June 2021, e-commerce was up 95% over June 2019. And according to Allied Market Research, the global intimate wear market is forecast to reach over $325 billion by 2025.
NAKD stock has lost its shimmer from brief highs after joining the small but mighty group of "meme stocks" in late January 2021. Its shaky financial footing may threaten to topple the brand by 2025 due to poor fundamentals, stock dilution, and other e-commerce competition. However, unless the struggling company can inject some life into its flagging brand, the Naked Brand Group stock price may drop to pennies on the dollar.
However, Naked has been looking to find a solid acquisition partners and capitalize on the cash pile it's sitting on. Buying businesses that can drive growth beyond next year and into 2025 can help the company make a radical turnaround.
In fact, Naked has already taken a significant step in using that cash to potentially evolve the business. The Naked Brand entered into an agreement with privately-held EV technology firm Cenntro Automotive Group, Inc. that Naked will acquire outstanding stock in three entities comprising Cenntro in early November 2021. With no direct connection between the EV market and intimate wear products, it's clear that Naked views this acquisition as a necessary step to breathing life into the company and potentially pushing it forward into the future.
The next shareholder meeting on December 21, 2021 is slated to give shareholders the chance to officially approve the merger, and it's likely that the acquisition will be approved. Whether this acquisition means a fundamental transformation for Naked and abandoning the intimate wear market altogether, that remains to be seen. If you're looking for an under-the-radar entry into EV stocks, then Naked might be the pick for you. For now, how this acquisition will impact future stock valuation is extremely speculative based on current performance data for the company.
The Naked Brand Group's negative revenue growth rate doesn't quite spark confidence for investors who want to hold onto this stock into 2025. In the near term, NAKD stock looks better for shorting. As for investors, the company's true (negative) fundamentals may eventually shine through.
One Stock to Buy Instead of NAKD
What will you do in light of the Naked brand stock forecast? Naked's lackluster history may lead you to believe that without the meme stock rally, the company wouldn't have just been treading on thin ice - it would have crashed into icy water.
Think you might want to shy away from NAKD? Why not invest in Hanesbrands Inc. (NYSE: HBI), which shows signs of being undervalued? Value investors may find the Winston-Salem, N.C., company a better deal all around.
This year, HBI has targeted higher levels of brand marketing investment to increase net sales 13% and adjusted operating profit to increase 9%. These percentages show a jump from the company's prior outlook for sales (4%) and adjusted operating profit growth (1%).
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