Jessica Alba's Honest Co. soars 44% in stock market debut

Jessica Alba and her family at NASDAQ headquarters on the day of the IPO of her company Honest on May 5 in New York. Photo / Getty Images

Shares of Honest Co., the nappy and baby-wipe seller founded by actress Jessica Alba, soared 44 per cent 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 moisturisers, 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 US$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 US$16 a piece during its initial public offering, raising almost US$413 million. It plans to use some of the money to expand and sell its products outside the US.

Cash Warren, Jessica Alba and Hayes Warren are seen outside the NASDAQ headquarters. Photo / Getty Images

It has never been profitable. Last year, it posted a loss of US$14.5 million, smaller than the US$31 million loss it reported in 2019. Its 2020 revenue rose 28 per cent from the year before to US$300 million.

Its stock, trading on the Nasdaq under the symbol "HNST," rose 7 per cent to close at US$23.

Alba, who has starred in "Sin City" and the "Fantastic Four" films, has a 6.1 per cent stake in Honest Co. that was worth nearly US$130 million after the stock's first day of trading.