Shein shares slumped as much as 10% after the fast-fashion retailer's long-delayed Hong Kong stock market debut on Tuesday. The stock recovered some ground to close 4% below its offer price, as investors weighed tariff pressure, regulatory scrutiny, and slowing growth.
Shares fell as much as 10% within minutes of the Singapore-headquartered company's trading debut on the Hong Kong Stock Exchange. The stock later pared losses to end the day 4% below its offer price at HK$46.62, after pricing at HK$48.56 a share.
A four-year quest to go public
The listing caps a long-anticipated debut that followed a failed attempt to list in New York, blocked by regulators over forced-labour concerns, and a shelved London flotation that faced similar questions from campaigners, MPs and investors. Shein trades under stock code 625 on the Hong Kong Stock Exchange, which said the company would be eligible for short selling from its first trading day.
Meanwhile, the IPO raised HK$13.6 billion, or about $1.74 billion. That offering represented about 6.6% of Shein's enlarged share capital, with cornerstone investors locked up for six months and roughly 5% of shares freely tradeable at debut.
According to Investing.com, Shein Chief Financial Officer Leigh Gui said the company would "innovate, optimize, and cooperate with our supply chain partners" at the opening gong ceremony.
Tariff changes have squeezed the business
The valuation slide reflects regulatory changes around the world that threaten Shein's model of shipping low-value packages directly to consumers to take advantage of duty exemptions. Shein swung to a loss of $99m in the first three months of this year, compared with net income of $395m a year earlier, after the US removed its "de minimis" import duty exemption on small packages.
Brussels has also introduced a €3 duty on small parcels imported from outside the bloc and intends to phase out the exemption entirely, while the UK has said it will do the same by October 2028. Shein has also disclosed an ongoing US Federal Trade Commission consumer protection investigation, and the European Commission is separately examining its handling of illegal products and the transparency of its recommendation systems.
Still one of the biggest listed fashion groups
Even after the drop, Shein's valuation sits around the same level as Sweden's H&M, against Zara owner Inditex's roughly $213bn market capitalisation. Saxo chief investment strategist Charu Chanana said the weak debut showed investors still don't see Shein as obviously cheap, given the stock priced at roughly 15 times forward earnings, more than double the multiple of Temu owner PDD.
Demand for the offering was tepid next to recent AI and robotics listings: the retail tranche was subscribed 5.63 times and the international portion 2.59 times. Existing investors who took part in the IPO included Michael Bloomberg's family office Willett Advisors, French entrepreneur Xavier Niel, and Microsoft, according to a regulatory filing.
Sources: The Guardian, Investing.com, Crypto Daily
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