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How to trade on The Honest Company’s IPO

Jessica Alba’s Honest Co is an American consumer goods company that was founded in 2011 by the actress. It produces and retails baby, beauty and household products that are described as being ‘natural, plant-based or chemical-free’. After raising multiple rounds of venture capital since 2016, Honest Co debuted it shares on the NASDAQ stock exchange on 5 May 2021 through an initial public offering (IPO). Find out more about The Honest Company’s IPO​ and how to start trading on its debut.

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When is The Honest Company’s IPO date?

Honest Co floated its shares on 5 May 2021 on the NASDAQ exchange under the ticker or stock symbol ‘HNST’. IPOs don’t usually go live at the start of the trading session as the exchange needs to undertake a price discovery phase to calculate the opening price. Therefore, traders should always look out for IPOs going live a couple of hours into the US trading session on the day.

Look out for other new and upcoming IPOs​ >

Honest Co valuation and share price

The company offered approximately 25.8m shares that were priced between $14 and $17 per share, where they actually opened at a higher price of $21. The total amount that the company raised for the IPO was around $412.8, giving the company an overall market cap of $1.44bn. Honest Co is planning to use the capital raised to pay for marketing and corporate expenses.

How to trade on Honest Co’s IPO

  1. Register for an account. You will be granted access to Honest stock on its debut trading day, as well as more than 9,000 other shares and ETFs within the market.
  2. Choose whether to spread bet or trade CFDs. Spread betting in particular is tax-free in the UK** and CFDs don’t require you to pay stamp duty.
  3. Choose whether to go long or short on Honest’s shares. Please note that some trading restrictions may apply on initial trading.
  4. Add risk-management controls to your positions. IPO stock can sometimes open at a much lower price than anticipated, or the share can drop throughout its first trading day. Stop-loss orders are an effective way to prevent capital loss.
  5. Take advantage of our fundamental analysis resources. Our platform’s news and insights section comes with Morningstar equity reports and a Reuters news feed, so you can stay on top of all recent and breaking news.

How has Honest performed financially pre-IPO?

In the SEC report that Honest Co submitted upon announcing its plans to IPO, the company states that revenue jumped by about 28% to $300m at the end of 2020. In particular, its skin and personal care category grew by about 36%, suggesting an increasing demand for ethically sourced beauty products. The company had a net loss for the year of around $14.5m.

Why may investors be interested in The Honest Company?

The Honest Company’s upcoming IPO may appeal to investors for the following reasons:

  • There is an increasing demand for clean, plant-based or vegan products, whether this be relating to food, beauty or personal care. In particular, the global clean beauty market is reportedly growing at an annual rate of 12.07%. Learn more about vegan investments.
  • The campaign is led by founder Jessica Alba. Celebrities can often have a positive impact on market sentiment for a company’s IPO and its potential outlook for the future.

What are the risks related to The Honest Company’s IPO?

The Honest Company has faced a number of public backlashes. Firstly, the business was valued at $1.7bn in 2016, when the discussion of an IPO first came around. It has since decreased to $1.5bn as of 2021, which may suggest that the value of the brand has dropped slightly.

Controversy arose in 2016 after consumers found that certain products contained synthetic chemicals that Honest had pledged on their website never to use. The company then had to settle a lawsuit of $7.34m for falsely labelling their products. They further came under fire in the same year for promoting an ‘organic’ infant formula that contained 11 different types of synthetic substances. Although this lawsuit was dismissed by the Superior Court, this still may have had a negative effect on brand value and in turn, this could lead to a potentially controversial IPO.

Trade on The Honest Company's IPO

Who are Honest Co’s competitors?

There is a large number of consumer goods companies in the US and globally, which may be seen as competitors of The Honest Company. These include Johnson & Johnson, L’Oréal, Procter & Gamble and Kimberly-Clark. These are all blue-chip stocks​ that were established many years ago and are well respected in their industries, so it may be difficult for Honest Co to achieve and maintain the same brand reputation at such an early stage.

Why trade Honest Co’s IPO with CMC Markets?

  • We’re no.1 for customer service*
  • Over 30 years industry experience
  • Trade anywhere with our award-winning app
  • Listed on the London Stock Exchange

Register for an account to get involved in The Honest Company’s upcoming IPO.

Examples of other celebrity-backed IPOs

The Honest Company is not the first business to be backed by a celebrity. Other recent IPOs have seen support from star investors, such as cannabis company Cellular Goods, which was backed by David Beckham. The company saw its share price surge over 400% on its first trading day in February 2021, which could be in part attributed to Beckham’s involvement. Another example is the upcoming IPO for vegan dairy alternative brand Oatly, which has seen busy investor activity from the likes of Jay-Z, Oprah Winfrey and Natalie Portman. The company now has an estimated valuation of $10bn, which is 5x its previous valuation of $2bn in July 2020. Read more about Oatly’s IPO.

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Who are the underwriters for Honest Co’s IPO?

Honest Co’s IPO will be led by a team of well-known underwriters and financial managers, including Morgan Stanley, Jefferies, Citigroup and JP Morgan. This is a standard process when taking a public company on a stock exchange, so learn more about the share market.

Where can I trade on The Honest Company’s IPO?

With CMC Markets, you can spread bet or trade CFDs on The Honest Company’s IPO on its first day of trading. Read more about the types of products that we offer to see which is most suitable for your trading goals and personality.

Is The Honest Company profitable?

Given that revenues were reported to have jumped by 28% at the end of 2020, investors may presume that The Honest Company will be profitable upon its stock market debut. However, you should still take careful measures when trading on a brand new share and carry out thorough company analysis.

Can I subscribe to IPO news?

You can register for trading alerts on our platform that will notify you of breaking news and announcements, including that of Honest’s upcoming IPO. Our news and analysis section is also kept up to date on a daily basis with reports from our expert market analysts.

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**Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

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