NAKD Stock Price Falls 41.64%: Why It Happened

By Amit Chowdhry ● Nov 21, 2020
  • The stock price of Naked Brand Group Ltd (NASDAQ: NAKD) fell by 41.64% as it went from a previous close of $0.29 to $0.17 on Friday, November 20. These are some of the reasons why the stock price likely fell.

The stock price of intimate apparel and swimwear company Naked Brand Group Ltd (NASDAQ: NAKD) fell by 41.64% as it went from a previous close of $0.29 to $0.17 on Friday, November 20. It is unclear as to why the stock price dropped since there is no direct news about the company, but there are external factors that potentially explains why the stock price fell.

It is very common for there to be a pullback following a significant jump in a single day. The stock price of Naked Brand Group increased by 123.08% between November 18 and November 19, only to fall by 41.64% as the rally during the previous day provided an exit point for skilled day traders looking to collect profits or reduce losses. The volume of Naked Brand Group shares traded on Friday was over 400 million.

A similar situation happened with the stock price of Naked Brand Group back in June as well. Between Monday, June 8 and Tuesday, June 9, the stock price increased by 139.71%, only to fall 37.42% the next day.

The three major indexes in the U.S. all tumbled on Friday in general as the S&P 500 (^GSPC) fell 24.25 points (-0.68%) to 3,557.62, the Dow (^DJI) fell 219.95 points (-0.75%) to 29,263.15, and the Nasdaq (^IXIC) fell 49.74 points (-0.42%) to 11,854.97. What caused the markets to fall was a spike in rising COVID-19 cases, which indicated that more restrictions would be applied throughout the country. And there was also a reported dispute between the U.S. Treasury and Federal Reserve over whether to renew emergency lending programs. This news overshadowed positive news over progress around a COVID-19 vaccine. Over 198,000 cases of COVID-19 were reported in the U.S. on Friday, November 20, overwhelming hospital ICUs and staff.

Naked Brand Group products are sold in 44 countries through thousands of retail doors and 61 company-owned Bendon retail stores in Australia and New Zealand. And Naked Brand Group saw a major impact on cash inflow due to the COVID-19 pandemic. So the company has been working with suppliers and lenders for extending their payment terms. And Naked has been in discussions with the Bank of New Zealand to extend loan repayment dates and landlords for providing abatements through periods of closures. Plus the company has been reducing staff hours and applied for government subsidies for the New Zealand and Australian employees. As of late October, Naked Brand Group had received NZ$2 million in subsidies from the New Zealand government and AU$0.7 million from the Australian government.

Several other fashion retailers also saw their stock price fall on Friday as well. As a comparison, Chico’s fell by 5.56%, Kohl’s fell by 2.61%, Nordstrom fell by 0.93%, and TJX Companies fell by 1.43%. And Destination XL, a specialty retailer of men’s big and tall apparel, fell by 17.82% — which was largely driven by its Q3 2020 announcement revealing that total sales fell 20.1% from the same quarter a year earlier.