Why Are The Honest Company (HNST) Shares Soaring Today

Adam Hejl /
2024/05/09 1:51 pm EDT

What Happened:

Shares of personal care company The Honest Company (NASDAQ:HNST) jumped 12.4% in the afternoon session after the company reported first-quarter results that blew past analysts' revenue and EPS expectations. The topline benefited from distribution gains and strong sales velocities across several key products, with notable strength in baby apparel and personal care offerings. Its gross margin also outperformed Wall Street's estimates. Zooming out, we think this was an impressive quarter that should delight shareholders.

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What is the market telling us:

The Honest Company's shares are quite volatile and over the last year have had 56 moves greater than 5%. But moves this big are very rare even for The Honest Company and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The previous big move we wrote about was 29 days ago, when the stock dropped 9% on the news that the company announced that famous founder Jessica Alba will leave her role as Chief Creative Officer "allowing her to shift her creative energy to new endeavors." According to the press release, Jessica Alba will continue to provide support and leadership as a member of the company's Board of Directors.

The Honest Company is down 0.5% since the beginning of the year, and at $3.18 per share it is trading 32% below its 52-week high of $4.67 from March 2024. Investors who bought $1,000 worth of The Honest Company's shares at the IPO in May 2021 would now be looking at an investment worth $138.04.

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