Shein set for lacklustre debut after setbacks cause huge drop in valuation

Chinese fashion retailer Shein made its Hong Kong debut on Tuesday in a listing that investors may view as lackluster. The IPO valued the company at approximately $26.5 billion, significantly lower than its 2022 peak of nearly $100 billion and well below the 10% discount to its IPO price indicated by grey market prices. The valuation drop reflects slower growth, regulatory risks, and competition in the face of tariff changes and scrutiny in the West.

Shein's revenue has not been growing, and much of the funding raised is returning to earlier investors. The company's net income fell by 39% last year, and it ran a loss in the first quarter. Shein's prospects in new markets could offset slower growth in the U.S. and Europe, but high delivery costs may limit benefits in developing markets.

The listing also marks a significant moment for Shein, as it returns to its Chinese roots after relocating its headquarters to Singapore. The IPO has helped compensate early investors who invested at higher valuations, with Shein agreeing to make cash payments totaling about $3.5 billion and share adjustments to some preferred shareholders.

However, investors will closely watch Shein's ability to defend its low-price model while absorbing higher trade costs, as it faces competition from Temu and other low-cost cross-border e-commerce players.