Shein shares plunge on grey market ahead of Hong Kong debut
They drop to as low as HK$40.04, compared with IPO price of HK$48.56
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SHEIN Global shares fell as much as 17 per cent in grey market trading on Monday (Aug 31), ahead of the fast-fashion retailer’s formal debut on the Hong Kong stock exchange.
The company’s shares dropped to as low as HK$40.04 apiece, compared with its initial public offering price of HK$48.56, based on a trading platform operated by KGI Securities. More than 63 million shares changed hands.
Shein raised US$1.7 billion in Hong Kong, giving it a market value of US$26 billion – a far cry from the US$100 billion it once commanded.
Still, questions about its upside in the face of slowing growth and tariff headwinds threaten to weigh on the stock as it prepares to debut on Tuesday.
Shein’s long-awaited IPO valued the company at more than 15 times forward earnings, calculations based on Bloomberg Intelligence’s estimates showed.
That is about double the 7.4 times ratio commanded by its competitor Temu’s parent PDD, and above the 10.7 times multiple for Hong Kong’s benchmark Hang Seng Index.
Shein’s growth has slowed markedly over the past year due to tariffs, while intensifying competition from Temu in key markets including the US and Europe also affected business.
Shein’s full-year sales are set to grow 3.4 per cent to US$44.3 billion next year, with net income of US$1.7 billion, said Bloomberg Intelligence.
Founded in China and now based in Singapore, the company 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.
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It 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.
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’s Hong Kong listing will test whether fast‑fashion and Internet retailers can still attract capital in an investing climate dominated by artificial intelligence fervour.
The company’s valuation also sits alongside that of Alibaba Group, the Chinese e‑commerce titan now aggressively pivoting into AI. Alibaba’s Hong Kong shares are valued at 15 times 12-month earnings.
“I’m not quite sure what their unique advantages are (that’d make me) say: ‘I would have to have this one,’” said Edmund Harriss, chief investment officer at Guinness Global Investors in London.
“I suppose I’m quite happy with my 10 per cent Alibaba positions in a China fund. They’re incumbents. I know how they operate these days, and they are subject to the same competitive pressures.” BLOOMBERG
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