The Honest Company, Inc.

Investigation
08/13/2021

Initial Lawsuit
09/15/2021

Lawsuit Progression
01/26/2022

Investigation

Public Offering Date
May 4, 2021
Proposed Claim
Securities Violation

Investigation regarding The Honest Company’s statements made in connection with its initial public offering (IPO), pre-IPO growth, global Covid-19 pandemic impact on sales and inventory and subsequent financial projections.

Main Event

Q2 2021 - Slow Growth

08/13/2021

SEC Filing

The Honest Company discloses its Q2 2021 financial results, showing revenue growth of 3% from the second quarter of 2020: “excluding an estimated $3.7 million COVID-19 stock-up impact primarily in Diapers and Wipes in the prior year period, revenue growth was 9%.”

“Household and Wellness revenue declined 6% from the second quarter of 2020 as consumer and customer demand for sanitization products decreased as consumers became vaccinated and customers managed heavy levels of inventory.”

The stock impact compares the closing price immediately preceding the date of the event and the following closing price. The price difference also reflects the overall mix of information.

Stock Impact

Close	Previous close	Price variation	Percentage variation
$10.07	$14.05	$-3.98	-28.33%

See more on Factual Timeline

Initial Lawsuit

Plaintiff brings this securities class action on behalf of persons and entities that purchased or otherwise acquired The Honest Company common stock pursuant and/or traceable to the registration statement and prospectus issued in connection with the company’s May 2021 initial public offering (IPO).

Filing Date
09/15/2021
Public Offering Date
05/04/2021
Transgression
Securities Violation
Filing Firms
Glancy Prongay & Murray LLP
Case Title
Cody Dixon v. The Honest Company, Inc. et al
Docket Number
2:21-cv-07405
Court
California Central District Court
Free File
Complaint

Allegations

According to the complaint, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, defendants allegedly failed to disclose to investors:

(1) that, prior to the IPO, the company’s results had been significantly
impacted by a multimillion-dollar COVID-19 stock-up for products in the Diapers and Wipes category and Household and Wellness category;
(2) that, at the time of the IPO, the company was experiencing decelerating demand for such products;
(3) that, as a result, the company’s financial results would likely be adversely impacted; and
(4) that, as a result of the foregoing, defendants’ positive statements about the company’s business, operations, and prospects, were materially misleading and/or lacked a reasonable basis.

Defendants

Company
The Honest Company, Inc.
Chief Executive Officer
Nikolaos Vlahos
Chief Financial Officer
Kelly Kennedy
Director
Jessica Warren
Director
Katie Bayne
Director
Scott Dahnke
Director
Eric Liaw
Director
Jeremy Liew
Director
Avik Pramanik
Underwriter
Morgan Stanley & Co. LLC
Underwriter
J.P. Morgan Securities LLC
Underwriter
Jefferies LLC
Underwriter
BofA Securities, Inc.
Underwriter
Citigroup Global Markets, Inc.
Underwriter
William Blair & Company, L.L.C.
Underwriter
Guggenheim Securities, LLC
Underwriter
Telsey Advisory Group LLC
Underwriter
C.L. King & Associates, Inc.
Underwriter
Loop Capital Markets LLC
See complaint for additional defendants...

Lawsuit progression

Docket Number
2:21-cv-07405
Court
California Central District Court

Lead Counsel

01/26/2022

The court issued an order appointing the lead plaintiff and lead counsel.

Lead Counsel
Labaton Sucharow LLP
Lead Plaintiff
Individual
Free File
Order for lead

Amended Complaint

02/21/2022

This federal securities class action is brought on behalf of all persons or entities who purchased or otherwise acquired Honest common stock pursuant and/or traceable to the Offering Documents issued in connection with the initial public offering (IPO), commenced on or about May 4, 2021, of 29,678,050 shares of common stock at a price of $16.00 per share.