Honesty may be the best policy, but for the Honest Company (NASDAQ:HNST), it’s more like a road map to failure. A disastrous earnings report showed off just how bad things are, and investors responded by bringing Honest shares down over 30% in Thursday afternoon trading.
The company posted earnings per share of -$0.14 per share, which was almost three times the expected loss of -$0.05 per share. In addition, earnings before interest, taxes, depreciation, and amortization (EBITDA) also missed expectations of $1.96 million, coming in at -$1.55 million. However, Honest posted $81.86 million in revenue, which beat estimates calling for $80.86 million. This represented a 1.8% gain over the same time last year.
Honest’s recently-installed CEO, Carla Vernon, noted deep dissatisfaction with the results of the earnings report. Vernon noted that Honest Company “…do(es) not believe they reflect the strength and potential of the Honest brand.” Further, Vernon assured anyone who would listen that this year will be all about “..taking actions and defining a strategy to set us up to be a stronger, more profitable company in 2024 and beyond.” Vernon remains “impressed” with product quality, brand strength, and team members, though actual customers seem much less so.
Nevertheless, the company’s own insiders—based on insider trading levels—don’t share that sentiment. Insider sentiment has swung to Very Negative as they sold $357,400 worth of shares in the last three months.