Digital Brands Group, Inc. (NASDAQ: DBGI) is a “digitally native vertical brand” which offers direct-to-consumer sales of a curated collection of luxury apparel. Surging over 60% in the first few hours of trading despite halting on October 28th, DBGI stock has caught the attention of many in the FinTwit community. Although it peaked near $6, investors appear to have higher price targets in mind as they speculate that DBGI stock is bound for more things to come.

Catalysts

DBGI’s run was fueled by the company’s announcement that it would be launching its brand – DSTLD – on Amazon Prime. This will allow the company to share its branded content and videos through the DSTLD Brand Store as an added benefit. According to Laura Dowling – DBGI’s Chief Marketing Officer – this will result in much higher short and long-term value for the company’s brands compared to how it previously functioned as a third party seller.

Launching an affiliate program across all its brands is expected to benefit the company as it increases its reach and enforces its brand. Working with major online publications will expose DBGI to millions of readers, with that in mind brand awareness and customer reach will likely exponentially increase. Considering the mass transition to online shopping and that 63% of online shoppers begin their search on Amazon’s site, the launch could be a major catalyst for DBGI’s brand.

DBGI is currently in a growth phase after releasing its bullish financial results which featured record e-commerce YOY revenue growth. It’s main brand – DSTLD – experienced a 24% increase in average order volume and a 76% increase in new customers. This illustrates that the company’s shared services platform is proving cost efficient leading DBGI’s CEO to expect a positive EBITDA for 2022.

Still not satisfied, the company has announced it expects its revenue growth to increase 350% from 2021 – raising its initial 2022 revenue guidance from $37.5 million to $42.5 million. While this is an ambitious goal, the company’s CEO – Hil Davis – believes the company’s portfolio of brands is established enough to power this leap in revenue. If this holds true, then DBGI’s long term investors could see a significant ROI.

Considering that one of its brands – Bailey 44 – has also experienced a 376% increase in revenue YOY thanks to a $20 thousand digital advertising campaign, DBGI might very well make this leap in revenue. But DBGI also expects to sustain its growth through acquisitions as well.

Unlike e-commerce brands, DBGI controls its own distribution and sources from third-party manufacturers to sell directly to the end consumer. DBGI uses consumers’ data and transaction history to target each customer and drive lifetime value. This strategy has allowed the company to expand its offering of styles and content beyond the digital to include select wholesale and retail storefronts as well.

Media Sentiment

@Inbar772 will DBGI hit the price target of $4 or above?

Technical Analysis

After peaking yesterday, DBGI settled at its current PPS of $3.98. DBGI stock formed a new resistance near 6.06 but has an immediate resistance near 4.55. The primary support lies at 3.45 with a secondary support at 3.13. Accumulation has remained low despite increased interest and the RSI is currently holding at 57. The MACD appears poised for a bearish crossover.

Should You Buy?

Aside from the recent catalyst-driven runup in DBGI stock, the company shows not only short but long-term signs of growth. Having a branded store on the Amazon Prime platform will open new avenues to the company as it pursues its ambitious growth rates. With plans for future acquisitions and expansion, investors could make short term and long term gains from DBGI. Dipping after its runup yesterday, DBGI stock could settle near $4.50 or continue its run back to $6.

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