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Naked Brand Group Ltd. (NAKD), an intimate apparel company, was likely not on many investors' radars just last month. However, thanks to the WallStreetBets-inspired short squeeze, NAKD has risen well over 500% in January alone. If WallStreetBets remains in the driver's seat, the overall market could see some serious benefits.
Are you considering NAKD and getting in on the frenzy? Our guide for beginners will help you get started.
How to Buy NAKD Stock
If you are a prior investor in the stock market, then you already know the basic steps to go through when buying Naked Brands stock. If this is your first time investing, here’s how to begin.
- Pick a Brokerage
Whether you are buying Naked Brands as a day trade or to buy and hold, you must first begin by opening a brokerage account. Numerous brokers offering both free and commission-based trading platforms. Continue below for what to look for when selecting which broker to place your trades through.
Some factors to consider:
Cost (commission-free or commission-based)
The type of investor the firm typically serves
The markets served
Research tools offered
- Decide How Many Shares You Want
Once you open your brokerage account and deposit funds, the next step is to determine how many shares of NAKD you want to purchase. Start by analyzing the current price of NAKD and determining how much capital you are willing to risk. Your investment can always decrease in value at any time.
- Choose Your Order Type
Before you purchase shares of NAKD, you must first determine what order type you want to use. Choosing the appropriate order type will protect your capital and lead to smoother investing. Look at some of the typical terms you may stumble across as you place an order.
The highest price a buyer is willing to pay for a share of a stock is known as the bid price.
The lowest price a seller is willing to accept for a share of stock is known as the ask price.
The difference between the bid price and the ask price is called the spread. Smaller market-cap companies like Naked Brands are likely to have a wider spread than large-cap companies like Facebook.
A limit order is an order that communicates to your broker that you want to buy a stock, but only below a specified price. For example, you might set a limit order that tells your broker that you want to buy NAKD stock at a maximum price of $1.50 a share. If the price of NAKD falls below $1.50, your broker will execute the order. If the price of NAKD rises above $1.50 a share, your broker will halt the order until prices drop again. This gives you more control over the price your order will fill at, which will help you protect more of your capital.
A market order is an order to buy or sell shares at the current market price. This order will execute at the prevailing price, regardless of how volatile the price is. As a result, market orders give you less control over the specific price you’ll pay, but often allow you to buy or sell much faster than a limit order.
A stop-loss order is a type of sell order that triggers once a stock drops to a predetermined price. For example, let’s say you bought 1,000 shares of NAKD stock at an average price of $1.50 a share. You might set a stop-loss order at $1.24. This means that if the price of NAKD falls to $1.24, your broker will automatically sell your shares. Stop-loss orders help you manage your risk by selling off your stocks when they reach a chosen low-end price point.
A stop-limit order combines the characteristics of both a limit order and a stop-loss order. When you place a stop-limit order, you need to specify both an upper limit price and a lower stop price. For example, if you’re buying NAKD, you might set a limit price of $1.75 and a stop price of $1.50.
If the price of NAKD rises above $1.50, your stop-limit order converts to a limit order. From here, your broker will fill the order as long as NAKD stock can be purchased for $1.75 a share or less. If the price rises above $1.75, your broker will stop filling the order. This gives you the investor more control over the price that your order gets filled at.
- Execute Your Trade
Now that you know the different order types and the basic terms, it’s time to buy NAKD. Select your order type, hit "buy," and hang on for the ride. Congratulations!
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NAKD Stock History
Naked Brand Group Ltd. (NAKD) was founded on May 11, 2017 in Auckland, New Zealand. NAKD is a swimwear and apparel company that has a variety of brands for a wide array of consumers. Some of these brands include Bendon, Lovable and Heidi Klum Intimates.
While the stock price elevated over the last month, the price today is nothing compared to the all-time high of $1,136 reached in June of 2018.
In November 2021, Naked Brand Group had found what it believed was an inroad in clean technology. CEO Justin Davis-Rice said, “I am happy to report that after extensive searching and due diligence, we believe we have found a disruptive opportunity in the clean technology sector.”
This news shows that the company may want to acquire a leader in the ESG sector. The firm has also sold off its Bendon retail stores to focus on its Frederick’s of Hollywood online business.
Pros to Buying NAKD Stock
The main upside to buying NAKD stock is the chance for huge returns in the short term. Over the past month, the price of NAKD has gone from under $0.20 to a high of $3.40 on January 28 (which represents over a 1,000% return). As the WallStreetBets-led market-wide short squeeze continues, Naked Brand Group Ltd. could move higher.
Cons to Buying NAKD Stock
Any stock that runs over 1,000% in a month clearly offers a significant amount of risk. NAKD stock is extremely volatile and ultimately largely dependent on momentum. If the market dynamics begin to change, the price of NAKD could decline significantly.
Investing in NAKD?
Whether you’re investing in NAKD, shorting it or searching for stocks under $10 to add to your long-term portfolio. It’s important to do your own research before you invest. Though you risk more investing in NAKD compared to investing in diversified funds, any investment can decrease in value at any time. Never invest more capital than you can afford to lose and diversify your holdings to limit losses in the event that market conditions change.
Frequently Asked Questions
What factors should you consider when selecting a brokerage firm?
Several factors include research options, tools, commissions and market access.
What is the spread?
The spread is the difference between the bid and the ask prices.