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Honest Co. Stock Slides After Earnings and Revenue Miss

Honest Co. shares plunge after the recently public household and wellness company founded by superstar Jessica Alba posts an earnings and revenue miss.

Honest Co.  (HNST) - Get Honest Company, Inc. Report stock plunged nearly 25% on Friday after the recently public household and wellness company founded by superstar Jessica Alba posted earnings and revenue that missed Wall Street forecasts.

Honest Co. posted a second-quarter loss of $20.03 million, or 17 cents a share, vs. a loss of $375,000, or 1 cent a share, in the comparable year-ago period. On an adjusted basis, the company lost 23 cents a share, wider than the 19 cent loss expected by analysts surveyed by FactSet.

Revenue came in at $74.6 million, up slightly from $72.3 million a year ago but well below analysts’ estimates of $78.8 million. The Los Angeles-based company did not provide guidance on future revenue or earnings.

Household and wellness revenue declined 6% from a year ago “… as consumer and customer demand for sanitization products decreased as consumers became vaccinated and customers managed heavy levels of inventory,” the company said.

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Gross margin decreased slightly during the second quarter, “… primarily due to a more normalized level of trade spend and higher input costs,” the company said.

Alba, who co-founded the direct-to-consumer brand in 2011 and now serves as chief creative officer, said in a regulatory filing ahead of the initial public offering that "we were raising the bar for the entire marketplace and becoming a David to the many Goliaths out there along the way."

Honest Co. went public in May at a price of $16 a share. At the time of its IPO, the company reported that its 2020 revenue totaled $300.5 million, up 27.6% from the previous year. The company posted a net loss of $14.5 million in 2020.

In June, analysts at Guggenheim, Jefferies, Citi and Morgan Stanley were all bullish in their coverage initiations of the company following its public debut. 

Shares of Honest Co. were down 24.14% at $10.66 in early trading Friday. The stock has fallen more than 53% since its debut.