Honest Soars 43% in NASDAQ Debut

Ben Bergman

Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.

The Honest Company

The Honest Company, Jessica Alba's Santa Monica-based maker of consumer goods that promise to be safer and eco-friendly, made a strong debut in its first day of public trading Wednesday.

Its stock closed at $23 a share, a 43% gain from the $16 opening price.


"I feel like this is where we really dig into this next phase of growth, and this is really the beginning for us in a lot of ways," founder and Chief Creative Officer Jessica Alba said Wednesday on CNBC.

Alba's 5.6 million shares and soon-to-vest options are now worth about $130 million.

However, that is dwarfed by the nearly 16 million shares that Scott Dahnke, board member and global co-CEO of the private equity firm L Catterton, owns. His stake is now worth around $360 million. L Catterton invested $200 million in the company in 2018.

Honest, which trades on the NASDAQ as HSNT, raised $413 million in its IPO. The company was founded by Alba and serial entrepreneur Brian Lee in 2011 and sells everything from eco-friendly diapers to skincare products to cleaning supplies.

Honest was rumored to be preparing an IPO in 2016, but after soaring growth in its infancy, the company struggled amidst quality control problems and questions about whether it could live up to its pristine image. The company voluntarily recalled its baby powder and baby wipes in 2017 after concerns they could cause skin and eye infections. The year before, it reformulated its laundry detergent after reports that it misled consumers about ingredients.

Honest has never made a profit but saw gross margins soar by 35.9% last year as the pandemic drove sales of sanitizing products, according to a regulatory filing.

Kyle Guske, investment analyst at New Constructs, says the stock is greatly overvalued and should be trading no higher than $7 a share.

"A valuation at $15/share implies the company's profits will be three times greater than Revlon (REV), and we think the chances of that happening are very low because of the formidable large incumbent personal care products companies with which The Honest Company is competing," Guske wrote in a research note. "The incumbents already own all the shelf space and dominate the industry."

https://twitter.com/thebenbergman
ben@dot.la

Subscribe to our newsletter to catch every headline.

Cadence

Genies Wants To Help Creators Build ‘Avatar Ecosystems’

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Genies Wants To Help Creators Build ‘Avatar Ecosystems’

When avatar startup Genies raised $150 million in April, the company released an unusual message to the public: “Farewell.”

The Marina del Rey-based unicorn, which makes cartoon-like avatars for celebrities and aims to “build an avatar for every single person on Earth,” didn’t go under. Rather, Genies announced it would stay quiet for a while to focus on building avatar-creation products.

Genies representatives told dot.LA that the firm is now seeking more creators to try its creation tools for 3D avatars, digital fashion items and virtual experiences. On Thursday, the startup launched a three-week program called DIY Collective, which will mentor and financially support up-and-coming creatives.

Read moreShow less

Here's What To Expect At LA Tech Week

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Here's What To Expect At LA Tech Week

LA Tech Week—a weeklong showcase of the region’s growing startup ecosystem—is coming this August.

The seven-day series of events, from Aug. 15 through Aug. 21, is a chance for the Los Angeles startup community to network, share insights and pitch themselves to investors. It comes a year after hundreds of people gathered for a similar event that allowed the L.A. tech community—often in the shadow of Silicon Valley—to flex its muscles.

From fireside chats with prominent founders to a panel on aerospace, here are some highlights from the roughly 30 events happening during LA Tech Week, including one hosted by dot.LA.

Read moreShow less

LA Tech ‘Moves’: HyperDraft Taps LegalZoom Exec

Decerry Donato

Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.

LA Tech ‘Moves’: HyperDraft Taps LegalZoom Exec
Photo by James Opas | Modified by Joshua Letona

“Moves,” our roundup of job changes in L.A. tech, is presented by Interchange.LA, dot.LA's recruiting and career platform connecting Southern California's most exciting companies with top tech talent. Create a free Interchange.LA profile here—and if you're looking for ways to supercharge your recruiting efforts, find out more about Interchange.LA's white-glove recruiting service by emailing Sharmineh O’Farrill Lewis (sharmineh@dot.la). Please send job changes and personnel moves to moves@dot.la.

Read moreShow less
RELATEDEDITOR'S PICKS
LA TECH JOBS
interchangeLA
Trending