An Honest Effort

Image Credit: iStock Images

Sign up for smart news, insights, and analysis on the biggest financial stories of the day.

Jessica Alba knows a thing or two about comebacks. After all, she starred in the 2007 flick The Love Guru alongside Mike Myers and Justin Timberlake.

Alba’s The Honest Company, a baby and beauty products retailer she co-founded in 2011, is set to make its debut on the Nasdaq today after a rocky few years.

Trouble In

Alba co-founded Honest Co. alongside serial entrepreneur Brian Lee after struggling to find “baby safe” products following the birth of her first child.

With Alba as the face of the brand and a pledge to maintain an “honest standard of safety and transparency” vis-à-vis product ingredients, the company had a strong start out of the gates.

Honest’s valuation soared to as high as $1.7 billion in 2015 before trouble hit. A string of defective products — such as organic sunscreen that failed to actually protect against the sun — and a string of class-action lawsuits plagued the company:

  • In 2017, Honest also recalled baby wipes because it found mold in some packages, and baby powder over concerns it may cause skin or eye infections.
  • Sales slid and the company lost its status as a “unicorn,” a private company worth more than $1 billion.

Pandemic Tailwinds: Then came the pandemic, along with an intense focus on health and wellbeing. While Honest has never been profitable, its revenue climbed from $236 million in 2019 to $300 million in 2020 as the pandemic fueled a run on cleaning products and other household staples.

Losses narrowed last year to $14 million from $31 million in 2019.

the takeaway

The IPO priced last night at $16 per share, making Alba’s stake worth a cool $90 million.