Shein shares plunge 10% in Hong Kong debut after US$1.7 billion IPO

SHEIN shares fell as much as 10 per cent in their Hong Kong debut after an initial public offering that raised HK$13.6 billion (US$1.7 billion).

The shares fell to as low as HK$43.72, compared with the IPO price of HK$48.56, which priced the company just above the middle of its marketed range.

That gave the company a market value of slightly more than US$26 billion, making it one of the world’s largest listed apparel and fashion companies, though still well below Swedish retailer Hennes & Mauritz, which is valued at about US$30 billion. 

Shein’s listing is a test of investor appetite for internet retailers, an industry that has struggled recently against the headwinds of inflation, trade disruptions and consumer caution in key markets including China.

It also offers a fresh benchmark for valuing cross-border e-commerce players after years of regulatory scrutiny and enthusiasm shifting towards companies involved in the AI buildout.

Since its valuation peak, the company has faced mounting challenges including higher tariffs, growing regulatory scrutiny and intensifying competition from PDD’s Temu and Alibaba’s AliExpress.

The IPO valued the company at over 15 times forward earnings, calculations based on Bloomberg Intelligence’s estimates show. That is about double the 7.4 times ratio commanded by PDD and above the 10.7 times multiple for Hong Kong’s benchmark Hang Seng Index. 

“With investors favouring AI and technology-related plays in Hong Kong, Shein’s appeal is relatively limited as a traditional e-commerce company that relies heavily on price competition,” said Shen Meng, director at Beijing-based investment bank Chanson & Co.

“Rising costs linked to US-China trade tensions and a less compelling growth story than Alibaba or PDD are likely to keep its valuation at a discount.”

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Founded in China and now based in Singapore, Shein has built a global fast fashion giant by using a data-driven supply chain capable of rapidly producing and shipping low-cost apparel directly to consumers.

The company emerged as one of the biggest beneficiaries of the pandemic-era e-commerce boom, with its valuation soaring to nearly US$100 billion in 2022. 

But attempts to go public at the time were unsuccessful as regulatory and political hurdles scuttled its plans to sell shares in the US and the UK.

Hong Kong ultimately emerged as the venue for the retailer’s market debut.

At 15 times price over earnings, “the stock is already pricing in part of a growth comeback before it has delivered one”, said Gary Tan, a portfolio manager at Allspring Global Investments.

“Investor appetite post-listing is likely to be cautious until management proves its business model reset can reignite growth.” 

Shein secured support from several cornerstone investors, including Boyu Capital, Tiger Global Management, General Atlantic, Tencent and UBS Asset Management Singapore.

Existing investors in Shein will also join cornerstone backers in pledging not to sell their IPO shares for a period of six months to signal confidence in the company.

The retail portion of the IPO was 5.6 times subscribed, while institutional investors bid for 2.6 times the shares available, the company said in a filing late on Monday.

The company said it plans to use the IPO proceeds to strengthen its technological capabilities, expand its global brand presence, support corporate responsibility initiatives and for general corporate purposes.

Still, some analysts argue that the IPO’s tightly controlled share sale may limit the extent to which public investors immediately test that valuation.

“With all pre-IPO and cornerstone investors accepting a six-month lockup, the March 2027 lockup expiry will be a more meaningful test of its market value than the listing debut,” Bloomberg Intelligence analyst Catherine Lim said in a note.

Shein’s four founders will keep nearly 60 per cent of the firm and close to 90 per cent of voting rights, locked for 24 months. 

Shein’s financial results showed notable swings in 2026.

The company posted a loss of US$99 million in the first quarter, compared with a profit of US$395 million a year earlier. Revenue growth has slowed, according to its preliminary prospectus.

Analysts said the retailer faces increasing pressure from changes in global trade policies.

US tariff measures have already raised costs, while Europe’s import duty on low-value imports threatens to erode a key advantage for cross-border e-commerce platforms.

Disruptions linked to the conflict in the Middle East have also added to rising logistical expenses.

Shein also continues to face regulatory scrutiny in the US, one of its biggest markets. Bloomberg reported this month that the Committee on Foreign Investment in the US is reviewing Shein’s acquisition of apparel retailer Everlane for potential national security risks related to Americans’ personal data.

While the Everlane acquisition is small compared with Shein’s IPO valuation, the review underscores the geopolitical and regulatory challenges that continue to shadow the retailer’s global expansion.

Investors will be watching whether those risks outweigh the company’s still sizable scale and growth ambitions. BLOOMBERG