Shein's valuation shrinks to quarter of 2022 peak as fast-fashion giant finally lists in Hong Kong

Shein, the China-born fast-fashion retailer that once commanded a valuation of $100 billion as it rapidly captured the US market, is finally making its stock market debut — in Hong Kong. Its valuation, however, has shrunk to roughly a quarter of its 2022 peak, as failed listing attempts in New York and London and a sharp slowdown in growth have dramatically lowered the market's assessment of the company.

According to the Hong Kong Exchanges and Clearing (HKEX), Shein will list on the exchange's main board on Tuesday. The IPO price has been set at HK$48.56 per share. The company is offering about 280 million shares to raise HK$13.6 billion ($1.73 billion), giving it a valuation of approximately $26.5 billion. That is roughly one-quarter of the $100 billion valuation it received in a private funding round in 2022, and less than half the $66 billion valuation it carried when it raised funds in 2023.

The most direct reason for Shein's diminished valuation is that it has failed to sustain its earlier growth trajectory. Last year's sales reached $41.85 billion, up 8% from the prior year, but net profit fell 38.7% to $2.06 billion. That compares with a sales growth rate of 20.7% in 2024, underscoring how sharply momentum has slowed. In the first quarter of this year, sales grew just 1.1% to around $9 billion, and the company posted a net loss of $99 million — though that figure was heavily influenced by a $328 million accounting loss tied to changes in the fair value of convertible redeemable preferred shares. Excluding that item, the net loss would be substantially smaller.

The slowdown first became apparent in Shein's core market, the United States. According to Euromonitor data, Shein's US apparel sales fell 4.5% last year from the prior year, and its market share slipped from 1.8% to 1.7% — the first decline since 2021. The US remains Shein's largest market, but both sales and market share have now turned negative in the market that had been the engine of its growth.

Behind the US weakness lies a regulatory shift squarely targeting Shein's ultra-low-price direct-shipping model. Shein's US sales in the first quarter fell 14.3% year-on-year, and the US share of total sales dropped from 29.4% for full-year 2023 to 22.5% in the first quarter of this year. Analysts say the elimination of the US de minimis exemption — which had allowed imports valued under $800 to enter duty-free — dealt a direct blow to Shein's business model of shipping goods directly from China to consumers.

The company now finds itself in a bind: it can neither maintain ultra-low prices nor easily raise them. With the US duty-free benefit gone, tariffs on small parcels shipped from China have increased Shein's cost burden. Raising prices would narrow the gap with traditional fast-fashion rivals such as Zara and H&M, while holding prices means absorbing higher tariff and logistics costs. Pressure is also mounting in Europe, where regulations on low-cost imports have tightened. Shein has projected that its sales growth rate in the first half of this year will remain around the 1 percent level seen in the first quarter, citing rising import costs in Europe, intensifying price competition and weakening demand in the Middle East as key headwinds.

Beyond the growth slowdown, the delay in Shein's listing also reflects external factors rooted in US-China regulatory tensions. The company originally pursued a New York listing but ran into resistance from US lawmakers and regulators over its Chinese supply chain and labor practices. It then pivoted to London, only to see that attempt stall amid delays in Chinese regulatory approval and continued supply chain controversy. Shein ultimately secured Chinese regulatory clearance and chose Hong Kong, making its market debut on the third attempt.

This IPO is difficult to view as a straightforward fundraising exercise, given that the amount flowing to existing investors far exceeds the new capital being raised. Shein will raise approximately $1.7 billion through the listing, but plans to pay out up to $3.5 billion in cash and additional shares to late-stage investors. The payouts are triggered by anti-dilution protections in preferred share agreements that require compensation to investors when the IPO valuation falls below the price they originally paid.

Nor is the company's own funding need the sole driver of the listing. According to the Financial Times, Shein holds approximately $15 billion in cash and short-term investments — far more than the proceeds it will raise through the IPO. That disparity has led observers to identify providing existing investors with an exit opportunity as one of the listing's primary purposes.

Indeed, existing shareholders are participating as cornerstone investors in the IPO. A group of existing backers — including Boyu Capital, Tiger Global and General Atlantic — has agreed to subscribe to approximately $383 million worth of Shein shares. While the company has said it intends to use the IPO proceeds to strengthen its technology capabilities and expand its global business, the structure effectively raises new capital while simultaneously opening an exit route for earlier investors.

Market observers are skeptical about the investment appeal of the IPO even at the reduced valuation. Dickie Wong, head of research at Hong Kong-based brokerage Yusmarts, said growth had "already slowed considerably" and advised against subscribing at the current price. He also said competition from Temu and Amazon Haul was adding to the pressure on Shein.

Winston Ma, a professor at New York University School of Law and former head of North America at China Investment Corp., told Reuters that public market investors "no longer pay for hypergrowth." He said Shein is now being valued as "a mature cross-border platform that needs to defend its margins amid trade tariffs, higher compliance costs and regulatory scrutiny from both the US and China."