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Why The Honest Company Stock Jumped 17% on Thursday

By Travis Hoium – Nov 11, 2021 at 4:07PM

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Earnings beat expectations, but there were some weak spots too.

What happened 

Shares of consumer staples stock The Honest Company (HNST 2.21%) jumped as much as 17% in trading on Thursday after reporting third-quarter 2021 financial results. 

So what

Revenue was up 6% to $82.7 million and net loss more than doubled to $5.1 million, or $0.06 per share. Analysts were expecting just $80.8 million in revenue and a loss of $0.06 per share. 

Person holding up diaper.

Image source: Getty Images.

Skin and personal care products were the biggest growth driver, up 28% from a year ago to $25.4 million. Diapers and wipes revenue was up 16% to $53.8 million, but household and wellness revenue plunged 71% to $3.4 million. 

It's also worth noting that retail channels were Honest Company's biggest growth driver as these revenues rose 28% to $43.5 million. On the other hand, digital sales fell 11% to $39.1 million. 

Now what

The growth numbers are solid but not exactly blowout figures in a great economic environment. Investors should also be concerned about digital sales falling because Honest Company is now relying on retail partners for growth. That's a tough position to be in if you lose shelf space to new products. 

Investors may like what they're seeing today, but I see a company that's growing slowly and still losing money in the consumer staples business. That's not a great position to be in for any company and Honest Company needs to show it can grow more quickly or increase profitability long-term. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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