Fast-fashion giant Shein saw its shares tumble by 10% on the Hong Kong Stock Exchange on Tuesday, following a lukewarm initial public offering (IPO).
Shein managed to sell approximately 280 million shares during its IPO, raising about HK$13.60 billion ($1.74 billion). However, the final offer price was set at HK$48.56 per share, which was lower than the maximum offer price of HK$49.5.
The sharp decline in Shein’s shares has pushed the Singapore-based company’s valuation to nearly a quarter of its peak. Its IPO now values Shein at around $26.5 billion, down sharply from its $100 billion private-market valuation in 2022.
Analysts Warn of Shein Valuation Risk
Shein’s Hong Kong IPO comes after its earlier plans to list in New York and London fell through. Shein faced scrutiny over its supply chain after declining to assure British lawmakers that its products were free of Xinjiang cotton linked to alleged forced Uyghur labor. Founded by Chris Xu, the company operates largely from China while selling its products overseas. Between 2021 and 2022, the company shifted its headquarters to Singapore.
Since reaching its peak valuation, the company has faced rising tariffs, tighter regulatory scrutiny, and stronger competition from Temu and Alibaba Group Holding’s (NYSE:BABA) AliExpress.
Shen Meng, director at Beijing-based investment bank Chanson & Co., told The Japan Times, "Rising costs linked to U.S.-China trade tensions and a less compelling growth story than Alibaba or PDD Holdings Inc. (NASDAQ:PDD) are likely to keep its valuation at a discount."
Brendan Ahern, CIO of KraneShares, expressed caution regarding Shein’s short-term prospects, despite lauding the company as "very innovative" for the medium to long term. Ahern told CNBC’s "Squawk Box Asia" that he "would not be counting on" Shein pursuing a secondary listing on the Nasdaq or elsewhere in the U.S. in the near future.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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