Naked Brand Group Ltd (NASDAQ: NAKD) stock is rocketing in the market this morning, trading on gains of more than 30% in the premarket hours. However, with no SEC filings or press releases issued this morning, many are wondering why. Here’s how I see it:
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NAKD Stock Pops On Rumors Of Coming News
At the moment, Naked Brand Group has two primary issues that threat potential delisting from the NASDAQ. First, the NASDAQ requires all listed companies to maintain a minimum price of $1 per share. Unfortunately, it has been quite a while since NAKD stock traded at this level.
Moreover, the NASDAQ requires listed companies to maintain minimum shareholder equity of $2.5 million. Unfortunately, the company doesn’t quite meet this requirement either.
Nonetheless, the NASDAQ gives extensions time and time again, allowing companies adequate time to meet their requirements. Based on the fact that we are still recovering from the COVID-19 pandemic, many believe that the NASDAQ will provide the company with an extnsion to meet these requirements and that delisting will largely be off of the table.
In fact, across message boards, we’re seeing notes about news that’s expected to come out today, announcing that NAKD has received an extension from the NASDAQ.
Keep in mind that these messages are rumors. There has been no confirmation from NAKD, nor NASDAQ, that an extension will actually be provided. Nonetheless, based on the NaASDAQ’s history, I believe that one will come down the line.
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The Bottom LIne
The stock market tends to react before news hits. At the moment, investors are piling in, in hopes that the NASDAQ will provide Naked Brand Group with an extension. As a result, the shorts on the stock, and there are quire a few, are losing moeny and exiting their positions in what’s quickly becoming a short squeeze.
Nonetheless, NAK has serious inadequacies that led to the position it is in at the moment. As such, if you decide to get involved with this stock for anything more than a short term trade to capitalize off of current volatility, make sure to do your research and get a real understanding of the risks before diving in.
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