NEW YORK (AP) — Shares of Honest Co., the diaper and baby-wipe seller founded by actress Jessica Alba, soared 44% in their stock market debut Wednesday, valuing the company at nearly $2.1 billion.
Alba founded Honest Co. a decade ago after using baby laundry detergents that caused her allergic reactions.
Along with detergent, the company's other first products included diapers and wipes that were sold on Honest Co.’s website. Today, the brand includes moisturizers, mascara and vitamins. While most of its sales come from its website, it also sells its products in major stores, including Target and Amazon.com.
The company promotes its products as using “clean" ingredients, but its image has taken a hit in the past due to product issues. Honest Co. paid $7.4 million to settle a 2015 class-action lawsuit that claimed its sunscreen was ineffective and not natural as the label said. And earlier this year, it recalled a bubble bath that may have been contaminated with infection-causing bacteria.
Honest Co., based in Los Angeles, said it sold nearly 26 million shares at $16 a piece during its initial public offering, raising almost $413 million. It plans to use some of the money to expand and sell its products outside the U.S.
It has never been profitable. Last year, it posted a loss of $14.5 million, smaller than the $31 million loss it reported in 2019. Its 2020 revenue rose 28% from the year before to $300 million.
Its stock, trading on the Nasdaq under the symbol “HNST,” rose 7% to close at $23.
Alba, who has starred in “Sin City” and the “Fantastic Four” films, has a 6.1% stake in Honest Co. that was worth nearly $130 million after the stock's first day of trading.