Salida a Bolsa de Shein: más Meta que H&M

Shein's stock is set to soar with a valuation of 27 billion dollars in its upcoming IPO in Hong Kong, a significant hit to companies like H&M and Inditex, which valued the company at 100 billion dollars in 2022. While some view Shein as a fast-fashion retailer, others see it as an app that hooks users into compulsive scrolling. The company's revenue growth has slowed to just 8% last year, compared to the 20% expected for 2024, and its profit margin is a mere 4.9%, nearly half of the previous year.

With stricter US and EU rules on low-value packages avoiding import taxes, Shein's valuation appears justified. However, considering Shein as a compulsive scrolling platform changes the narrative. Investors favor growth and profitability, but Shein isn't performing well in either area. Revenue growth has been sluggish, and profit margins are low.

The US and EU have tightened rules allowing low-value packages to avoid import taxes. Compared to other fashion companies, Shein's valuation remains high. The company claims the online fashion market will grow at an annual rate of 5.5% through 2030. If Shein maintains this pace and converts 2.5% of its sales into profits like it did in the last quarter after adjusting for one-time factors, it could generate 1.1 billion dollars in profit this year.

At this valuation, Shein's profit potential is roughly 25 times its expected future earnings. Inditex, which owns Zara, trades at 26 times, while H&M trades at 22 times. These comparisons suggest Shein's shine has faded. Could the differences between Shein and H&M or Inditex be a mistake? After all, Shein stands out by not having physical stores and using a network of small suppliers to produce small batches, minimizing inventory and offering an almost limitless range at low prices.

Its online platform is sophisticated enough to keep customers scrolling for hours. Shein may be overlooking a significant opportunity by positioning itself as just a fashion retailer.