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Capital Calls: Honest IPO pop

2 minute read

Jessica Alba, actor and businesswoman, poses during the IPO of The Honest Co at the Nasdaq Market site in New York City, May 5, 2021. REUTERS/Brendan McDermid

NEW YORK, May 5 (Reuters Breakingviews) - Concise insights on global finance.

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CLEAN LIFECYCLE. Jessica Alba’s Honest Co (HNST.O) made a star-worthy stock-exchange debut on Wednesday when shares opened more than 30% above the offering price set the day before. On the same day, the U.S. government reported that the number of births last year fell to its lowest level since 1979. The Covid-19 baby bust could be a challenge for Honest read more .

Diapers and wipes made up 63% of Honest’s top line of $301 million last year. The ethical lifestyle company has expanded to other areas including household cleaning products and cosmetics. Those divisions are growing faster but from a much smaller base.

Based on a market capitalization of around $2 billion, Honest’s enterprise value-to-sales ratio is nearly 7 times, a much higher multiple than consumer stalwarts like, say, Pampers giant Procter & Gamble (PG.N). Honest isn’t profitable either . “We can really meet consumers at every life stage,” Alba, who launched the company in 2012, told Breakingviews. To justify Honest's market valuation, she may have to do just that. (By Jennifer Saba)

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Earlier in Capital Calls:

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