What Happened?
Shares of personal care company The Honest Company (NASDAQ: HNST) fell 5.3% in the morning session after the market faced broad selling pressure amid surging oil prices and renewed fears of stagflation.
Oil prices surged over $119 a barrel, hitting levels not seen since mid-2022. This spike came as the market braced for a fresh look at inflation data. The increase in oil and gas prices led the market to anticipate an uptick in the upcoming monthly data, sparking concerns about stagflation, a period of slow economic growth combined with rising prices. This negative outlook contributed to a weak opening for U.S. equity futures, impacting the broader market.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy The Honest Company? Access our full analysis report here, it’s free.
What Is The Market Telling Us
The Honest Company’s shares are very volatile and have had 27 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 24% on the news that the company reported weak third-quarter results that missed revenue expectations and lowered its full-year forecast for sales and earnings.
For the quarter, revenue fell 6.7% from the previous year to about $93 million, falling short of analyst expectations. The bigger concern for investors was the updated outlook. The Honest Company cut its full-year revenue projection from a prior estimate of 4% to 6% growth to a new range of a 3% decline to flat. In addition, the company revised its adjusted earnings (EBITDA) forecast downward to a range of $21 million to $23 million, a drop from the previous guidance of $27 million to $30 million. These results came as the company announced a new plan, called “Transformation 2.0,” aimed at simplifying its business by getting rid of less profitable products.
The Honest Company is up 5.2% since the beginning of the year, but at $2.75 per share, it is still trading 50.2% below its 52-week high of $5.51 from May 2025. Investors who bought $1,000 worth of The Honest Company’s shares at the IPO in May 2021 would now be looking at an investment worth $119.35.
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