Shein's $50B Hong Kong IPO faces investor skepticism

Shein's Hong Kong IPO prospectus, filed July 27, reveals a business under pressure: revenue grew just 8% to $41.8 billion in 2025, net income collapsed 39% to $2.06 billion, and the first quarter of 2026 delivered a $99 million loss. The fast-fashion giant is seeking a $40 to $50 billion valuation, but analysts say institutional investors will struggle to justify that number given a 2.9% operating margin and contracting U.S. sales.

Why investors are repricing Shein

The quarterly loss partly stems from a $328 million fair-value charge on convertible redeemable preferred shares following an accounting change. But strip that out, and the underlying story remains weak. Revenue growth has decelerated sharply from the hyper-growth years, and core earnings are softer.

Winston Ma, executive director of the Global Public Investment Funds Forum and former managing director at China Investment Corporation, expects institutional investors on the Hong Kong Stock Exchange to focus on that slim 2.9% operating margin.

“Investors will re-price Shein away from a pure hyper-growth tech platform toward a physical retail and logistics player navigating high-friction global trade.”

— Winston Ma, Global Public Investment Funds Forum

That repricing has already begun in private markets. Shein's valuation fell from $98.2 billion after a 2022 fundraising round to $64 billion following its 2024 round. The current IPO target of $40 to $50 billion represents another potential step down.

Trade policy is squeezing margins on both sides of the Atlantic

Shein's business model depended on the U.S. de minimis exemption, which allowed low-value imports to enter duty-free. That exemption is now gone. The company acknowledged in its prospectus that the change has hurt sales growth and increased expenses. Its response: price hikes for American customers.

Europe poses similar problems. The EU's new fee on low-value imports could have an impact "generally in line with or exceed" what Shein observed in the United States, the company disclosed. Citi noted in a research note that Shein's European struggles could ease competitive pressure for incumbents like Primark and H&M.

U.S. sales have contracted since 2025, and European growth is slowing. Together, these two markets account for more than half of Shein's global revenue.

Could timing have been better?

E-commerce analyst Juozas Kaziukenas thinks so. He argues Shein would have faced far friendlier conditions had it pursued its earlier plans for a London or New York listing.

"There's no proposed solution to the declining growth," Kaziukenas said. He expects revenue in the U.S. and Europe to remain stagnant in the near term, pushing Shein's future growth toward "Rest of the World" markets.

Shen Meng, director at Beijing-based investment bank Chanson & Co., is blunt about the outlook: Shein will "unlikely achieve a substantial uplift in valuation either at its Hong Kong IPO or in the secondary market compared to its last private fundraising round."

What happens next

Shein has not disclosed a timeline for pricing or trading. But the prospectus filing starts a clock. Institutional roadshows will test whether fund managers believe the company can stabilize margins in a higher-tariff world. A valuation at the low end of the $40 to $50 billion range, or below it, would not be a surprise.

Source: Tech-Economic Times / ET