The Honest Company, Inc.
According to the Complaint, The Honest Company, Inc. claims it is a “digitally-native, mission-driven brand focused on leading the clean lifestyle movement, creating a community for conscious consumers and seeking to disrupt multiple consumer product categories.” Honest’s three product categories are (1) Diapers and Wipes, (2) Skin and Personal Care, and (3) Household and Wellness. According to Honest, these three categories represented 63%, 26% and 11% of Honest’s 2020 revenue, respectively.
On April 9, 2021, the Company filed its initial registration statement on Form S-1 with the SEC, which forms part of the Registration Statement. On April 26, 2021, the Company filed its final amendment to the Registration Statement with the SEC on Form S-1/A, which forms part of the Registration Statement. The Registration Statement was declared effective on May 4, 2021. On May 6, 2021, the Company filed its prospectus on Form 424B4 with the SEC, which forms part of the Registration Statement. In the IPO, the Company sold 6,451,613 shares of common stock, plus an additional 3,871,050 shares of common stock pursuant to the underwriter’s option to purchase additional shares at a price of $16.00 per share.
The Complaint alleges that the Registration Statement was materially false and misleading and omitted: (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.
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