Naked Brands was among the small-cap meme stocks that made headlines in 2021 as retail investors poured into volatile and badly overvalued stocks. Rising from under $1 to over $3 per share during the first wave of meme stock runs, the struggling lingerie and swimwear company briefly caught widespread attention.
Since then, the stock has almost completely fallen off the radar. What followed, however, is a story far more unusual than even the meme hype. Here’s what you should know about what happened to NAKD stock and where the company is today.
What Happened to NAKD Stock?
In 2021, Naked Brands announced its acquisition of private EV technology firm Cenntro Electric Group. The company signaled its intention to divest fully from its previous online apparel business and allocate its remaining capital to Cenntro’s business operations. In this sense, the already public company essentially became an SPAC. The unusual move came after NAKD stock had already struggled to maintain its NASDAQ listing for some time.
After the acquisition, investors received seven shares of the new business entity for every three shares of NAKD stock they previously owned. At the time of the deal, the combined company’s market capitalization was projected to be nearly $2 billion. That market cap, however, has collapsed in the intervening two years.
Needless to say, this decision resulted in turmoil for longtime investors who expected the company to succeed in the lingerie business. Investors who bought the stock at its 2021 highs have seen massive losses as the company struggles to reinvent itself as an automaker.
Such transitions rarely pan out well for shareholders, and Naked Brands is a prime example of a jarring business shift that appears to have wiped out most of the existing value of the original company.
What Is the New Name for NAKD Stock?
Following the Cenntro acquisition, the combined company continued to trade under the NAKD ticker symbol.
In January of 2022, however, Cenntro (NASDAQ:CENN) officially changed its stock symbol to better reflect the new EV focus of the company.
Today, the stock trades under the ticker symbol CENN.
IS NAKD Going Out of Business?
The Naked Brands clothing line that was once the company’s core business no longer has any relation to the Cenntro Electric Group business entity. In this sense, it’s reasonable to say that Naked Brands went out of business.
The question of whether Cenntro Electric Group will go out of business is perhaps more complicated. In the most recent quarter, the company announced a 32 percent year-over-year increase in revenue to $4.2 million. Vehicle sales increased by over 80 percent, though this placed the number of vehicles sold in the quarter at just 235.
While the growth numbers may appear positive for Cenntro, it’s important to keep in mind that the company is still tiny, and high current growth rates may not be an indication of future potential. With competition in the electric vehicle industry at a fever pitch, a company selling just 235 vehicles in a quarter is far from an appealing prospect. Competition from EV majors like Tesla and Rivian will likely make it very difficult for small companies like Cenntro to succeed in the marketplace.
The company is also losing money rapidly. In Q2, Cenntro reported a loss of $14.1 million. Given that the company’s cash stockpile is currently just over $60 million, it will only be able to operate at this kind of loss for a few more quarters before depleting its reserves.
While further debt financing remains an option, the current interest rate environment would make heavy borrowing both risky and expensive.
A final component of this question is the fact that part of Cenntro’s management team is still made up of executives from Naked Brands. Given that the clothing company wasn’t particularly successful in its own right and that the automobile industry is vastly different from the apparel industry, investors may have concerns about the management of Cenntro.
Although Cenntro shows no immediate signs of going out of business, it’s certainly a possibility. Steep losses, a limited cash reserve and fierce competition could all spell trouble for the company.
Considering the financial, competitive and management risks of Cenntro Electric Group, it’s far from difficult to imagine that the company could eventually go out of business.
NAKD Stock Merger
The transformation of Naked Brands into Cenntro Electric Group was not a merger in the traditional sense. NAKD acquired Cenntro, which up to that point had been a privately owned company.
The acquisition, however, was handled in an extremely strange manner. Rather than integrating Cenntro Electric into the existing business structure of Naked Brands, the company sold off its existing business and essentially went into a completely different industry.
As such, the acquired company became the main business of the newly formed business entity.
NAKD Stock Delisted
Both before and after the Cenntro Acquisition, Naked Brands has struggled to maintain its listing on the NASDAQ.
Earlier this year, the company failed to meet the reporting qualifications required to maintain a NASDAQ listing.
Following the filing of new reports, however, Cenntro received written notice that it had regained its good standing with the NASDAQ.
As of the time of this writing, Cenntro Electric Group is still listed on the NASDAQ.
NAKD Stock Forecast
At this time, there are no standing analyst price forecasts for Cenntro stock. Overall market sentiment, however, appears to be quite negative.
Over the last 12 months, the stock has lost nearly 80 percent of its value. This negative view of the stock is also reflected in the tiny share of the company that is owned by institutional investors.
As of this writing, just 8.25 percent of Cenntro Electric Group is institutionally owned. In the last quarter, institutional selling outpaced buying by over five times.
NAKD Stock Price News
Like many meme stocks, NAKD has dropped dramatically from the highs it achieved in 2021. Today, shares of Cenntro Electric Group trade at just $0.27.
At under $82 million, the company also has a minuscule market capitalization compared to its previous high point.
Barring large increases in revenue and vehicle sales, it seems unlikely that the stock will move appreciably upward anytime in the near future.
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