Cases & investigations

Cases & investigations

The Honest Company, Inc.

Kaskela Law LLC is investigating The Honest Company, Inc. (“Honest” or the “Company”) (NSADAQ: HNST) on behalf of the Company’s long-term investors.

In May 2021, Honest completed its initial public offering (“IPO”) of common stock, selling over 29.6 million shares of stock to investors at a price of $16.00 per share.

According to a recently filed shareholder complaint, at the time of the IPO, Honest failed to disclose to investors that its customers had panned one of Honest’s recently launched products, the Clean Conscious Diaper.  Additionally, the complaint alleges that Honest failed to disclose the negative impact on the Company of consumers’ stock-up of Honest products in response to the COVID-19 pandemic.

As further detailed in the complaint, on June 16, 2021, Honest reported the Company’s first quarter 2021 financial results. Honest’s revenue in its Company’s Diapers and Wipes category was down, and the Company recorded a $4.5 million net loss in the first quarter of 2021 as compared to net income of $0.6 million in the first quarter of 2020. On this news, the Company’s stock price fell $1.30 per share, or 7% to close at $16.35 on June 17, 2021.

Then, on August 13, 2021, Honest issued a press release reporting the Company’s second quarter 2021 financial results and a net loss of $20 million for the second quarter 2021 as compared to a net loss of only $0.4 million for the second quarter of 2020. The Company noted its revenue grew only 3% as compared to the second quarter of 2020 because it was negatively impacted by “an estimated $3.7 million COVID-19 stock-up impact primarily in Diapers and Wipes in the prior year period.” On this news, the Company’s stock price fell $3.98 per share, or 28%, to close at $10.07 per share on August 13, 2021.

The investigation seeks to determine whether the members of Honest’s board of directors violated the securities laws and/or breached their fiduciary duties in connection with the above alleged misconduct.

Current Honest stockholders who purchased or acquired shares of the Company’s stock prior to June 16, 2021 are encouraged to contact Kaskela Law LLC (D. Seamus Kaskela, Esq. or Adrienne Bell, Esq.) at (484) 229 – 0750, or by completing the form on this page, for additional information about this investigation and their legal rights and options.

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