HNST.US
id: 1469
The Honest Company (HNST) $27.5M Investor Settlement
Late claims are being considered for compensation, subject to approval.
$27,500,000
Cash SettlementC.D. California
Court2:21-CV-07405
Case number05/05/2021
Class period Start09/15/2021
Class period End07/14/2025
Claim deadlineThe Honest Company ($HNST) has agreed to settle $27.5M with investors over claims that it misled them about the demand for its products and financial risks at the time of its 2021 IPO.
Outline
In 2021, The Honest Company reported disappointing Q2 earnings. After that, the company was accused of failing to disclose major risks associated with its inventory build-up and product launches in its IPO filings. Following this, $HNST dropped 28%, and The Honest faced a lawsuit from investors.
Timeline
- May 5, 2021 – The Honest Company completed its $412M IPO, emphasizing strong growth and an “omnichannel” sales strategy.
- August 19, 2021 – The company reported weak Q2 earnings, blaming lower sales on leftover stock from the pandemic and poor response to its new diaper line, causing $HNST to drop 28%.
- September 15, 2021 – Investors filed a lawsuit, alleging Honest misrepresented demand and failed to disclose key financial risks in its IPO prospectus.
- December 23, 2024 – Honest accepted to settle claims for $27.5 million.
Background
In May 2021, The Honest Company launched a $412 million IPO, promoting strong consumer demand, a balanced growth strategy, and the rollout of its new “clean conscious diaper” line. The company emphasized momentum in its diapers and wipes segment, which accounted for nearly two-thirds of total revenue at the time.
However, Honest allegedly failed to disclose that demand had been temporarily inflated by COVID-related stockpiling and that the new diaper design received negative consumer feedback. Internally, executives had already identified slowing sales, market saturation, and increased competition.
On August 13, 2021, Honest reported disappointing Q2 results, citing post-pandemic demand declines and poor reception to its new diaper line. The company also disclosed a sharp revenue drop in its diapers and wipes category, contrary to the growth narrative shared at IPO.
Following the announcement, $HNST fell 28%.
On September 15, 2021, shareholders filed a claim against The Honest Company.
What Can Investors Expect Now?
The Honest Company ($HNST) has agreed to settle $27.5M with investors over claims that it misled them about the demand for its products and financial risks at the time of its 2021 IPO.
If you were damaged due to this situation, you can file for a payout and get your share of the settlement. You can check if you are eligible and other details in the FAQ section below.
Case Type
US Securities Class Action
Case Status
Accepting Late Claims
Alleged Offence
Misleading Statements,
Fraud,
Failure to Disclose
Suspected Party
Directors,
Management
Security Type
Stocks
Trade Direction
Long
Payout per Share
0.41
Filing date
09/15/2021
Plaintiffs
Kathie Ng
Attorneys
LABATON SUCHAROW LLP
Defendants
Nikolaos Vlahos; Kelly Kennedy; Jessica Warren
Judge
Mark C. Scarsi
Administrator
EPIQ
Settlement agreement date
2025-03-12
Court hearing date
07/28/2025
Objection deadline
07/07/2025
Attorney fee
$9,975,000
Class wide damages
$125,000,000
Trades matching type
FIFO
Frequently Asked Questions
Who is eligible for this settlement?
Do I have to sell securities to be eligible?
How long does the payout process take?
How much will my payment be?
What is 11th Estate?