Shein shares sink 12% as slow revenue growth fuels doubts

Shares of Shein Global Holdings shed nearly 14 percent to a record low in Hong Kong on Tuesday following its first earnings report since listing, with a 67 percent plunge in second-quarter profit and a warning of ongoing tariff headwinds and logistics cost volatility. In its unaudited filing, the company reported a 67 percent drop in profit for the June quarter to US$228 million, while revenue only grew 1 percent to US$11 billion.

Revenue from Europe and the United States, Shein's biggest markets, fell 14 percent and 6 percent respectively, largely due to the removal of customs duty exemptions for low-value goods in both regions. To counteract the decline, Shein increased prices and cut advertising spending in Europe, as stated in the filing. Chairman and CEO Xu Yangtian highlighted the challenging global consumer environment in the first half of 2026, citing macroeconomic uncertainty, geopolitical complexity, and shifting trade policies.

He also predicted that the external environment would stay uncertain in the second half of 2026, with ongoing tariff headwinds and logistics cost volatility. The company's performance in the quarter fell "more than 10 percent below the low end of the range" indicated in its IPO prospectus, as noted by Jefferies analysts. The analysts cited margin pressures and a shifting revenue mix as reasons for the underperformance.

Shein's second-quarter margin contracted to 2.1 percent from 6.2 percent a year earlier, mainly due to a significant increase in oil prices and freight rates amid Middle East geopolitical tensions. The company decided to absorb the cost increases rather than pass them onto consumers. Jefferies lowered its target price for Shein to HK$23 from HK$26, warning of significant downside risk for net profit.

Since listing on the Hong Kong stock exchange on September 1, Shein's shares have plummeted over 30 percent below their IPO price of HK$48.56. At its lowest point on Tuesday, the stock fell to HK$30.36, before recovering to HK$30.88. Today, the company's market capitalization stood at approximately HK$130 billion (US$16.6 billion), a far cry from its peak valuation of nearly US$100 billion in 2022 and considerably lower than the US$64 billion valuation reached during its Series D+ funding round in 2023.