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​​Naked Brand Group (NAKD) stock forecast: new year, new me?

By Prachi Sinha

Edited by Vanessa Kintu

10:21, 7 January 2022

Undewear hanging on a rail
Naked Brand is a New Zealand-based intimate and sleep apparel company – Photo: Shutterstock

In 2018, Naked Brand Group (NAKD) and New Zealand-based intimate and sleep apparel company, Bendon Limited completed their merger and began acting as subsidiaries of the Naked Brand Group Limited. 

The merged companies’ scope of work also extended to designing, manufacturing and marketing the 74-year old iconic lingerie brand Frederick’s of Hollywood under a licence agreement with Authentic Brands Group. 

However, the last two years haven’t been easy for the intimate apparel and swimwear company. As it navigates the new year under a new business and name, join us as we undertake a Naked Brand stock forecast and catch up on recent news.

Reviewing the last two years

Barely two years into the merger, on 15 May 2020, Naked Brand revealed a non-compliance notification it received from the Listing Qualification Department of NASDAQ. The stockholder’s equity was below $2.5m, which did not meet the minimum requirement for continued listing on the Nasdaq.

Pursuant to a reformative business structure after hitting the lowest of lows, on 21 January 2021 Naked Brand announced its decision to sell off its Bendon subsidiary. The decision was said to be aligned with the company’s focus on its e-commerce strategy.

The chairman of Naked, Justin Davis-Rice, said on 21 January 2021: 

“We have experienced success with our e-commerce business and are prepared to rapidly expand our existing digital footprint as we pursue the development of a single, world-class technology platform serving the intimate apparel industry and seek to become the conduit for consolidation.”

However, almost a year on, the NAKD stock analysis remained as dismal as before. In its 27 October 2021 press release, the company announced it had been granted a 180-day extension (until 25 April 2022) by the Nasdaq’s listing qualifications department, to bring its bid price per share to the minimum of $1.00.

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Naked Brand and Cenntro Automotive Group join hands

As reported by The Motley Fool, Naked Brand turned itself into a de-facto special purpose acquisition company (SPAC) by the end of 2021 to avoid delisting. A SPAC is essentially a shell company with no operations of its own. A SPAC only exists to acquire a private company and make it go public without going through the traditional initial public offering (IPO) process.

With 2021 over, Naked seems to have found a match and completed its acquisition of the privately-held, commercial electric vehicle (EV) company Cenntro. This is a fairly big industry move from its intimate apparel business, and with the close of this acquisition, the company has also divested its Frederick’s of Hollywood online business.

While the ticker NAKD has been retained, the name of the company has been changed to Cenntro Electric Group Limited as of 29 December 2021.

The combined company has reported an excess of $250m in cash to fund its organic growth and less than $10m in liabilities. In addition to this, Cenntro reaffirmed its 2022 delivery guidance for a minimum of 20,000 vehicles. It expects to generate revenues of $506m in 2022.

The existing shareholders of Naked Group hold approximately 31.85% of the new combined company, while Cenntro’s equity shareholders own approximately 68.15% on a fully diluted basis.

Naked Brand’s former CEO, Justin Davis-Rice, said of the merger on 8 November:

“Together with Cenntro’s outstanding vehicle pipeline, I believe the combined company will allow our shareholders to participate in a company that has reached an inflection point in its development that, together with the Naked Brand Group balance sheet, will produce tremendous growth.”

While Davis-Rice continues to hold a position as a non-executive director, Cenntro’s CEO Peter Wang became the head of the new company.

Wang has been excited to take Cenntro public, and through Naked Brand’s acquisition, he feels the process has been fast-tracked. He further mentioned that they had earlier looked at several options to go public but Naked provided an opportunity to gain a loyal and enthusiastic shareholder base such as the ‘Naked Army’.

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Naked Brand stock price movement

The latest Naked brand stock news leading to the tie-up between an intimate apparel company and an EV tech company has surprised the markets, though investors’ initial reaction seemed favourable.

With the stock acquisition news out between Cenntro and Naked Brand Group, on 8 November 2021 the stock price soared by approximately 6% and closed at $11.26 the next day.

On 22 December 2021, Naked Brand announced that its ordinary shares would begin trading on a one-for-15 split-adjusted basis. A stock split – reverse stock split in this case – changes the number of shares held by investors. However, it mostly did not change the percentage of shares an investor would continue to hold in the company.

Naked Brand’s reverse split was driven by the intent to enable the company to meet the minimum share price requirement for its acquisition of Cenntro.

Reporting a 13.55% fall from its previous close of $7.23, as of 21 December 2021, the stock closed at $6.25 a day later.

Ever since then, the stock has continued to dip down and at the time of writing on 6 January 2022 stood at $4.05. Compared with the closing price of $11.26 as of 9 November 2021 when the stock acquisition was announced, the stock price has plummeted by 64%.

Technical analysis

Milan Vaishnav, a consulting technical analyst at Gemstone Equity Research & Advisory Services, shared a technical view on NAKD: 

“The stock has been in a secular downtrend after forming a classical double-top resistance between 14.17 and 14.06. Presently it has formed a low at 4.95 and is seen trying to make a short-term base at that level. The only thing that hints at a likely bottom formation is the surge in volumes with the declines. Exponential volumes within a decline often tend to mark a bottom for that stock. Keeping this classical input in view, this stock can be accumulated while keeping a protective stop at 4.80 on a closing basis. Relative strength index (RSI), which has shown a bullish failure swing, supports this view. RSI is oversold but remains neutral against the price.”

He further mentioned that he looked at a short-term chart for NAKD, as the longer-term charts do not present anything readable for NAKD stock prediction at this point.

Analyst forecasts and predictions

At this point, the combined entities of Cenntro and Naked Brand Group are undergoing a re-branding and its digital assets are expected to be updated during Q1 2022. This limits our scope to provide NAKD share price forecasts at this time.

According to TipRanks, no analysts have given ratings to the NAKD stock in the past three months.

However, algorithm-based forecasting service Wallet Investor has provided 2022-2026 NAKD stock price targets. By December 2025, it states the NAKD stock price could be closing at $3.34. Furthermore, it forecasts that the NAKD stock price could drop down even lower by December 2026 and be in the range of $1.89 to $2.95.

Alex Sirosis, from InvestorPlace, remains skeptical about any NAKD stock projection, writing: 

“If you’re like me, you’ll likely be scratching your head as to why Naked Brand Group would attempt to pivot from clothing retail into EV technology. There’s simply no connection between the two. It’s difficult to see how there is any carry-over between the two at all. I can’t see any reason to invest in Naked Brand Group at this point. To me, it has gone from one of the better narratives to come out of meme stock mania to one of the strangest ones. Investors will have trouble believing that it deserves attention in the EV space. Capital will not rush toward the shares for that reason.”

When looking at NAKD stock’s future, it’s important to bear in mind that analysts’ forecasts and price targets can be wrong. Analysts’ NAKD stock expectations are based on making fundamental and technical studies of the stock’s performance. Past performance is no guarantee of future results.

FAQs

Will NAKD stock go up?

According to algorithm-based application Wallet Investor, the share price for NAKD could go as high as $8.12 as of May 2022, an upside of 75% from its last close of $4.63 as of 5 January 2022. However, according to TipRanks, there are no analyst ratings available on NAKD stock outlook as of now making its future look uncertain.

Note that predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.

Is NAKD a good investment?

The NAKD stock has completely overhauled its business and pivoted to EV technology from its intimate apparel business. How this merger plays out in the future remains to be seen. You need to carry out your own NAKD stock review to decide if the stock price is likely to rise further in the future.

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Cenntro Inc
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-0.16 -9.320%

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