Jessica Alba's Honest Co. Sued Over Alleged COVID-Related Fraud

Jessica Alba's Honest Co. is being sued by shareholders who claim the company misled them by failing to disclose so many parents stocked up on diapers and other Honest products at the beginning of the pandemic that sales in subsequent quarters tanked.

The shareholders claim in a new lawsuit, obtained by TMZ, they bought Honest stock after the company went public in May, 2021 because the financial reports from 2020 showed gangbuster sales. They figured, hey, this company is on the rise so let's get in now.

Just 2 months later, Honest released a report saying they lost $20 million in the second quarter of 2021, and stock prices plummeted nearly 43% from the public offering price.

The shareholders claim Honest hid an essential fact ... that consumers had stockpiled diapers, wipes and other wellness products because of the pandemic, and by the time the company went public Honest knew sales were falling in a big way.

Now the shareholders do concede ... Honest disclosed that COVID was a driver of high sales and there was no assurance that would continue. But, the shareholders says Honest actually KNEW sales were declining but didn't ante up the info.