Shein Shares Slide Again as Tariff Headwinds Weigh on Lacklustre Hong Kong Debut

HONG KONG – Shares of fast-fashion e-commerce giant Shein slipped more than 3% on Wednesday, a day after a turbulent debut in which the stock plunged as much as 10% before recovering to near its issuance price.

The stock traded at HK$46.94 in early trade, down from the HK$48.56 offer price. Hong Kong’s Hang Seng Index was about 0.9% lower.

Shein raised US$1.7 billion in its initial public offering, one of the largest in Hong Kong this year. The listing valued the company at US$26.5 billion – nearly a quarter of its peak valuation of nearly US$100 billion in 2022.

The partial recovery on Tuesday was the result of so-called stabilisation measures that can be applied to large listings to prevent sharp declines on debut, according to a source and analysts.

**Tariffs and regulation pressure the model**

Higher import duties in key markets, growing regulatory risks and intensified competition are hampering Shein’s growth prospects, investors and analysts said.

The end of “de minimis” tariff exemptions in the United States and the European Union has raised duties on low-value parcels from China, directly impacting Shein’s ultra-low-cost cross-border model. Higher logistics costs, partly due to the war in Iran, have also squeezed margins, according to a report from Arkansas Online.

“Shein’s weak performance reflects investors reassessing a growth story that has become harder to underwrite,” said Brandon Ho, head of investment advisory for Singapore at Arta Finance. “Revenue growth has slowed over the past few years and margins are under pressure, while higher tariffs and customs costs in the U.S. and EU are weakening the economics of its low-cost cross-border model.”

Tariff costs have forced Shein to raise prices, “cutting into its main advantage,” Jacob Cooke, CEO of WPIC Marketing + Technologies, told Arkansas Online.

**Financial strain and regulatory probes**

Shein recorded a US$99 million loss in the first three months of this year, compared with a US$395 million profit in the same period a year earlier, Arkansas Online reported, citing company figures.

The company has also faced regulatory scrutiny in Europe. In February, the European Union launched a probe against Shein focused on “illegal” products, including suspected child sexual abuse material, the report said.

In May, Shein acquired San Francisco-based eco-friendly clothing retailer Everlane, a move that some analysts said was not the best fit, according to Arkansas Online.

**A long road to listing**

Shein originally explored listing in New York and London but shifted to Hong Kong after increased scrutiny from regulators in Beijing, the U.S. and Europe. The company moved its headquarters from China to Singapore around 2021 but later pivoted back to emphasise its Chinese roots.

“Guangdong is Shein’s roots, and the starting point of our journey,” founder Sky Xu said in a speech in February, as reported by Arkansas Online.

At the listing ceremony, chief financial officer Leigh Gui said the IPO “marks a new starting point,” according to the same report.

“Shein has probably missed its golden listing window due to the shift of momentum toward AI and tariffs, which can affect valuations and profitability,” Gary Ng, senior economist for Asia Pacific at French bank Natixis, told Arkansas Online.

Despite the weak start, Shein’s listing is a boost for Hong Kong’s stock exchange, which has raised more than US$40 billion from IPOs this year and has a backlog of companies seeking to list, Morningstar’s Lorraine Tan said in the report.