The Honest Company stock and Jessica Alba
The Honest Company IPO: valuation and share price
The Honest Company went public on Wednesday 5 May 2021 on the Nasdaq stock exchange under the ticker HNST. The company offered more than 25.81 million shares at $16 each, which was in the middle of its expected $14-$17 range.
The pricing means The Honest Company raised $412.8 million, valuing it at $1.44 billion.
The IPO offered employees and company executives the opportunity to sell their shares – an estimated 19.3 million.
Find out more about trading stocks and shares.
What is The Honest Company?
The Honest Company is a consumer products business that aims to help individuals improve their health.
The enterprise was created by actress Jessica Alba after the birth of her first child. The family’s experience of allergies and asthma – resulting in long hospital stays – led to Alba seeking alternative baby products with non-toxic, eco-friendly perks.
In Alba’s own words: ‘I founded The Honest Company on this idea: Everything that touches you and your family – everything in your home – needs to be nontoxic, needs to be effective and beautiful to look at, and needs to be affordable.’
How does The Honest Company make money?
The Honest Company makes money through the sale of its goods, including childcare products – such as baby diapers and wet wipes – bath products, skincare and beauty items, and home cleaning products. As proportional segments of revenue, these sections make up:
- Diapers and wipes: 63%
- Skin and personal care: 26%
- Household and wellness: 11%
Honest products can be found across 32,000 retail locations including Target, Costco and Amazon. However, Honest is a digital-based company, making approximately 55% of its revenue through online sales.
Is The Honest Company profitable?
No, the Honest Company has not been profitable since it launched and expects to continue making a loss as it grows. The company also doesn’t expect to pay dividends for the foreseeable future.
In earnings released for year-end 2020, the company had net losses of $14.5 million – although this is half its $31 million losses sustained in 2019. For the year ending December 31 2020, The Honest Company generated revenue of $300.5 million, a 28% increase from 2019.
For the three months to March 31, 2020, Honest made a revenue of $72.4 million and net income of $559,000. The company expects revenue growth between 8% and 11% for the first quarter of 2021.
Honest is still classed as an emerging growth company – a company that hasn’t reached an annual revenue of more than $1.07 billion – which means it still won’t have to make the same disclosures required of other public companies.
Who are The Honest Company’s competitors?
The Honest Company is competing with far larger household product conglomerates such as Procter & Gamble and Kimberly-Clark, as well as other companies entering the clean and natural beauty space such as L’Oreal and Estee Lauder.
Honest estimates its market share is approximately 5% of the clean and natural diaper category. HNST has plans to expand, but many of these competitors are far more established and have far larger financial resources.
What is The Honest Company’s strategy?
The Honest Company plans to strengthen its online business and boost its presence in international markets. With the expansion of the market for health-conscious consumers, the Honest Company plans to capitalise on the growing demand.
The money it has acquired through its IPO will be put toward marketing and direct-to-consumer advertising, as well as toward research and development of new products and acquisitions that may complement the brands existing offering.
It’s worth noting that the company’s reputation was called into question in 2017, when The Honest Company had to settle two class action lawsuits over the claims its products had ‘no harsh chemicals’ even though they contained synthetic ingredients. Honest reached a $US7.35 million settlement.
Who are the directors of The Honest Company?
The Honest Company’s management team includes:
- Jessica Alba: Co-Founder
- Brian Lee JD: Co-Founder
- Sean Kane: Co-Founder & Advisor
- Christopher Gavigan: Co-Founder and Chief Purpose Officer
- Muhammad Shahzad: Chief Financial Officer
Other members of The Honest Company’s board are:
- Jeremy Liew: Lightspeed Venture Partners
- Dennis Phelps: Institutional Venture Partners
- Eric Liaw: Institutional Venture Partners
- Neil Sequeira: General Catalyst Partners
- Nick Vlahos: The Honest Company
- Brian Lee JD: The Honest Company
Does Jessica Alba own The Honest Company?
Jessica Alba – the actress best known for her roles in the Fantastic Four and Dark Angel – founded Honest in 2011. However, she is not the sole owner of The Honest Company; there are plenty of investors who own shares of the business.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
For further details see our full non-independent research disclaimer and quarterly summary.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.
City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.
City Index is a trademark of StoneX Financial Ltd.
The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.
© City Index 2024