What Happened?
Shares of personal care company The Honest Company (NASDAQ: HNST) jumped 3% in the afternoon session after it appeared to rebound from a drop in the previous session that was linked to a broader market sell-off.
The previous day, the stock fell amidst wider market weakness driven by concerns over economic conditions. A key factor influencing the downturn was a report indicating that U.S. manufacturing activity had contracted for the sixth consecutive month, raising fears about a slowing economy and causing major indices like the S&P 500 and Nasdaq to decline. With no new company-specific news today, the stock's upward movement suggests investors are buying back shares following the recent macro-driven dip.
After the initial pop the shares cooled down to $3.98, up 3.4% from previous close.
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What Is The Market Telling Us
The Honest Company’s shares are extremely volatile and have had 36 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 previous big move we wrote about was about 21 hours ago when the stock dropped 3.3% on the news that the stock was caught in a broader market sell-off driven by concerns over economic weakness and rising bond yields. Major indices, including the S&P 500 and Nasdaq, declined over 1% as investors returned from the holiday weekend to unfavorable news. A key catalyst for the downturn was a report indicating that U.S. manufacturing activity had contracted for the sixth consecutive month, sparking fears of a slowing economy. Additionally, rising Treasury yields put pressure on equities, as higher returns on bonds make stocks a less attractive investment. The negative sentiment was widespread, weighing on various sectors, including consumer staples. The sell-off marked a volatile start to September, a month that is traditionally challenging for the stock market.
The Honest Company is down 41.5% since the beginning of the year, and at $3.98 per share, it is trading 53.6% below its 52-week high of $8.57 from November 2024. 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 $172.83.
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