Jessica Alba and her baby business, The Honest Company, are being sued for allegedly misleading shareholders about their 2020 sales.
According to the lawsuit obtained by KNEWZ, shareholders decided to buy stock in The Honest Company after it went public this past May, mainly because the financial reports from 2020 showed sales were up. But in reality, the shareholders claim Alba’s company reportedly failed to disclose the fact that sales were only up because customers were stockpiling the products due to the Covid-19 pandemic sweeping the nation.
According to the lawsuit, in July — two months after The Honest Company went public — they released a new report disclosing how the company lost more than $20 million in sales for 2021’s second quarter, and that their stock prices crashed almost 43% from the original public offering price.
The shareholders’ main gripe, and the reason for their lawsuit, is that they believe Honest hid the fact customers had stocked up on diapers, wipes, and other wellness products due to the pandemic. By the time the company went public in May, the shareholders believe Alba and her company knew sales were falling drastically and willingly decided not to inform shareholders, and potential shareholders, of that information.
This dramatic turn in events comes only months after Radar reported how Alba was partying hard in Miami due to officially reaching billionaire status – thanks, in no small part, to the success of her Honest Company. After the company went public, The Honest Company was reportedly valued at $2 billion dollars.
Now, only nearly three months later, it appears that Jessica Alba and The Honest Company might be in some hot water if this lawsuit goes further.
So far, no representatives for Jessica Alba or The Honest Company have responded to the allegations. They also have not yet commented or made any public statements regarding the lawsuit.