LOS ANGELES—Vernon Carla, Chief Executive Officer of Honest Company , Inc. (NASDAQ:HNST), recently sold a significant portion of the company's common stock. According to a filing with the Securities and Exchange Commission, Carla sold 65,176 shares on November 20, 2024. The shares were sold at a weighted average price of $7.10, totaling approximately $462,749.
The transaction was part of an approved sell-to-cover plan designed to address tax liabilities arising from the vesting of previously granted Restricted Stock Units (RSUs). Following the sale, Carla retains direct ownership of 2,763,143 shares, including 2,226,255 RSUs, which are convertible to an equivalent number of common shares.
This transaction is part of a routine financial strategy for executives, enabling them to manage tax obligations efficiently while maintaining substantial ownership in the company.
In other recent news, The Honest Co. has been the subject of several analyst upgrades, reflecting its strong financial performance. Lake Street Capital Markets raised its price target for the company to $7.00 while maintaining a Buy rating, citing a 9.3% growth in channel consumption and improvements in gross and EBITDA margins. Similarly, Loop Capital adjusted its price target to $7.00 and maintained a Buy rating, highlighting a 15% sales increase in Q3 and a gross margin of 39%. Telsey Advisory Group also increased its price target for The Honest Co. to $6.00, maintaining a Market Perform rating, in response to six consecutive quarters of adjusted EBITDA surpassing expectations.
These recent developments follow The Honest Co.'s record Q3 revenue of $99 million, a 15% increase year-over-year, and an expanded gross margin of 39%. The company's CEO, Carla Vernon, and CFO, Dave Loretta, have revealed an optimistic full-year guidance, expecting revenue growth in the high single-digit percentage range and adjusted EBITDA between $20 million and $22 million.
However, the company also reported a non-recurring legal expense of $4.1 million, with an expected additional $4 million to $5 million in the upcoming quarter. Despite this, The Honest Co. projects an annual gross margin between 37% and 38%. As these recent developments unfold, the company remains focused on expanding product availability and maintaining financial gains for shareholders.
InvestingPro Insights
The recent stock sale by Honest Company's CEO Vernon Carla comes at a time when the company's stock has shown remarkable performance. According to InvestingPro data, Honest Company has experienced a significant 355.97% price total return over the past year, with a particularly strong 94.37% return in the last month alone. This impressive rally has pushed the stock to 95.77% of its 52-week high, suggesting robust investor confidence.
Despite the strong stock performance, InvestingPro Tips indicate that Honest Company is not currently profitable, with analysts not anticipating profitability this year. However, the company's financial health appears stable, as it holds more cash than debt on its balance sheet and its liquid assets exceed short-term obligations.
The stock's recent momentum is further highlighted by InvestingPro Tips, which note a significant return over the last week and strong returns over the last three and six months. This aligns with the CEO's decision to sell shares as part of a tax management strategy, potentially capitalizing on the stock's upward trajectory.
Investors should note that Honest Company's stock price movements are quite volatile, and the RSI suggests the stock may be in overbought territory. This information, combined with the company's high Price/Book multiple of 5.52, indicates that careful consideration is warranted for potential investors.
For those seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Honest Company, providing a deeper understanding of the company's financial position and market performance.
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