Jessica Alba Is Honestly Having a $2.2 Billion Better 5th of May Than You Are
Happy Cinco de mayo, today was Jessica Alba’s The Honest Company’s IPO debut and has hit a market value of $2.2 Billion (HNST). Marking another great day for female founders. The company sold 6.5 million shares opening up at $21.22 above its $16 pricing ask raising $413 million. The company’s 2020 revenues were in excess of $300 million a 28% increase over 2019. It lost $14.5 million in 2020. Diapers and wipes accounted for 63% of last year’s sales.
The personal care products brand has made a strong bet on developing good clean sustainable products highlighted in an investor letter on Honest’s commitment to healthy products. In addition to baby products like shampoos, the company also sells cosmetics as well as cleaning supplies, a collection that was launched during the coronavirus pandemic.
Honest Backers include L Catterton, Lightspeed Venture Partners, and General Catalyst.
Speculators with Forbes contributor status have dragged the IPO and the company through the mud suggesting the company is overvalued citing Honest’s price to earnings fundamentals while comparing the company with Revlon. A comparison that could really only be treated as thick-witted. Revlon’s brand is arguably dying with massive debt obligations. While fundamental analysis by purely quantitative metrics shouldn’t be completely thrown to the wayside even in this market, the qualitative points still stand, first, what new publicly listed e-commerce brand is trading at over 7x earnings, they all are. Second brand prestige matters and thus provides its own competitive advantage in competitive markets. A smaller brand doesn’t have to have the size of Johnson and Johnson or the established foothold of Revlon to justify value, distribution and expansion will come as its products will become coveted by its reputational advantages and its very public commitment to superior products.
The company has yet to post a profit, however ethical and health-conscious brands are continuously making headway against incumbents in a world with significantly more brand critical consumers. Since 2017 the company has pivoted away from a solely DTC brand to an omnichannel strategy now with a presence. The company’s products are sold online and in 32,000 retail locations, including Walgreens, Amazon and Nordstrom, and Boots in the U.K.
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