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Jessica Alba's Honest Co. surges in Nasdaq debut

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Actress Jessica Alba’s eco-friendly personal care products brand Honest Co. (HNST) surged 44% in its trading debut on the Nasdaq.

Shares of Honest Co. sold for $16 in their initial public offering to close at $23 per share in trading Wednesday, giving the company a market value of about $2.1 billion.

Honest CEO Nick Vlahos told Yahoo Finance Live that the successful IPO was a “validation” of the company’s strategy. “We’re a mission driven brand. We are at the forefront of this kind of clean movement as it pertains to how consumers are looking at products from an ingredient perspective, around sustainability, around social responsibility.”

That produced a hefty return for the actress turned entrepreneur, whose stake in the company she founded a decade ago is worth about $130 million — at least on paper. Alba didn’t plan to sell her shares in the offering, according to a filing with the U.S. Securities and Exchange Commission.

Though she has stepped down as chair of the board, Alba remains a director of the board and is also the company’s chief creative officer.

NEW YORK, NEW YORK - MAY 05: The Honest Company founder and chief creative officer Jessica Alba and The Honest Company CEO Nick Vlahos pose outside of Nasdaq as The Honest Company rings the Nasdaq Stock Market opening bell to mark the company's IPO at NASDAQ MarketSite on May 05, 2021 in New York City. (Photo by Dimitrios Kambouris/Getty Images for The Honest Company )
NEW YORK, NEW YORK - MAY 05: The Honest Company founder and chief creative officer Jessica Alba and The Honest Company CEO Nick Vlahos pose outside of Nasdaq as The Honest Company rings the Nasdaq Stock Market opening bell to mark the company's IPO at NASDAQ MarketSite on May 05, 2021 in New York City. (Photo by Dimitrios Kambouris/Getty Images for The Honest Company )

Alba, 40, founded Honest Co. in 2011 as a direct-to-consumer brand built on a commitment to healthy products, free of harmful toxins and chemicals. The "Fantastic Four" actress has said she got the idea for the company after breaking out in a rash from detergent that she touched while washing her baby's clothes.

Since then, Honest has grown into a national brand and has partnerships with retail giants including Amazon (AMZN), Costco (COST), Target (TGT), and Walgreens (WBA).

In addition to baby products like wipes, diapers and shampoos, the company also sells skincare and cosmetics. During the pandemic, Honest expanded its product line to include cleaning supplies, and it paid off. Vlahos said its household and wellness business grew 111% in 2020.

Still, Honest has not turned a profit. Net sales grew by 27.6% last year to top $300 million and the company narrowed its net loss to $15 million.

And Honest’s path to becoming a public company has not been without controversy. The Los Angeles-based company was hit with multiple lawsuits in 2015 and 2016 for not being quite as honest as its name claimed to be. One of the suits was dismissed, while the others, related to mislabeling ingredients in some of its products as natural or chemical free, were settled.

Vlahos said the $413 million raised in the stock sale will go towards expanding and innovating its product offerings.

Honest Co. sells eco-friendly baby products, skincare, cosmetics and cleaning supplies.
Honest Co. sells eco-friendly baby products, skincare, cosmetics and cleaning supplies.

“What we’re looking at right now is the opportunity to go deeper and wider within the current categories that we’re in, both domestically as well as internationally,” he said.

Vlahos said 55% of Honest's sales are digital orders while 45% come from brick and mortar. International represented 2% of Honest’s 2020 revenue, which according to Vlahos is another avenue of future growth.

Vlahos, who calls Alba a “mega influencer” and a “great partner” said, “She is thrilled the vision from 2011 that she established is being executed against. We are looking forward to building the next modern consumer goods company for the future. Then we can look back from a legacy perspective at the next 100 years and say that we created something that’s really magical.”

Alexis Christoforous is an anchor at Yahoo Finance. Follow her on Twitter @AlexisTVNews.