Honest Stock Surges Within A Day While Its Facing Lawsuits: What To Expect?

Honest is a consumer products company that provides non-toxic natural baby products. According to the latest statement, the Schall Law Firm, a national company specializing in shareholder rights lawsuits, filed a class-action lawsuit against the Company. The reason is for violations of the federal securities laws. If you are a holder of the initial public offering of shares and would like to serve as lead plaintiff, you have until November 15, 2021. Despite that, the stock market of HNST is in a positive dynamics by 3.91% to $9.29 today in the pre-market trading session. Its stock closed up -2.93% at $8.94, giving the Company a market capitalization of $807 million.

According to the lawsuit, the Company issued false and misleading claims to the market. The Honest Company’s sales rose before the IPO based on high consumer demand during the COVID-19 inventory accumulation period. But, during the IPO, the demand for the Company’s products decreased significantly. The Company’s revenues are not expected to be sustained at pre-IPO levels based on this consumer behavior. Therefore, the Company’s public statements were false and materially misleading during the IPO period. Investors faced losses when the market learned the truth about Honest.