Eleven months ago, Jessica Alba’s consumer packaged goods company, the Honest Company, went public. Prior to going public, bankers and analysts predicted it would list at $16 a share. It ended up debuting at $21 and ending its first day of trading at $23.
At $23 a share, the Honest Company’s market cap was $2.7 billion.
This was a truly impressive accomplishment considering the company’s up-and-down valuation history. Honest first achieved a $1 billion valuation after a private fund-raising round in 2014. A year later, a second round of funding upped the valuation to $1.7 billion. At this point, it was widely believed that Jessica still owned 20% of the company’s shares. That meant her stake was worth $340 million on paper.
The next few years were a bit rocky. In October 2017, Honest raised a “down-round,” which is when you accept an investment at a lower-than-previous valuation. At this round the company’s value was bumped back down to $1 billion. Still an impressive number, but where would it go from there?
When the company went public with a $2.7 billion valuation in May 2021, insiders and previous investors must have been nothing short of ecstatic. And when the company debuted, we learned from official filings that Jessica owned 5.65 million shares. At $23 a share, on the first day of trading she officially sported a pre-tax stake worth $130 million.
Unfortunately, the ecstasy did not last.
As I type this article, HNST is trading at around $5.25 a share. That’s up slightly from an all-time low of $4.20 that was briefly hit on March 25.
At $5.25 a share, the company’s market cap is $481 million and Jessica’s 5.65 million shares are worth $29.66 million, pre-tax. After taxes we’re not even talking about enough to buy a nice house in Beverly Hills, Brentwood or Bel-Air.
And here’s where I’m going to throw you a curve-ball that will also serve as a necessary full disclosure:
I actually bought some shares of HNST on March 7 for my retirement account. I have multiple friends who have recently had babies and they seem to be spending fortunes on Honest products (diapers, lotion, baby wipes). So I personally believe it’s undervalued based just on that anecdotal evidence. But please know that I’m not a stock expert or a financial advisor.
Time will tell if I’m right or wrong! For Jessica’s sake, I hope I’m right!