Shein Shares Slide Again in Hong Kong as Tariff Headwinds Dent Fast-Fashion Valuation

HONG KONG — Shares of online fast-fashion retailer Shein slipped more than 3% on Wednesday, a day after a volatile debut session that saw the stock recover from a 10% intraday plunge to close near its issuance price.

The stock traded at HK$46.94 in early trade Wednesday, down from its HK$48.56 issuance price. Hong Kong’s Hang Seng Index fell about 0.9% on the day.

Shein’s share price rallied late on its debut day on Tuesday, a rebound that came from so-called stabilisation measures that can be applied to large listings to prevent sharp declines, according to a source and analysts cited by Reuters.

The company raised $1.7 billion in its initial public offering, which valued the firm at $26.5 billion — nearly a quarter of its peak valuation of nearly $100 billion in 2022.

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

“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.”

**Tariffs and regulatory pressures mount**

The end of “de minimis” tariff exemptions in the U.S. and the European Union has raised duties on low-value parcels from China, including Shein’s products, according to a report from Arkansas Online. Higher logistics costs partly due to the war in Iran have also squeezed the company’s low-price business model and profitability.

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

Shein recorded a $99 million loss in the first three months of this year, compared with a $395 million profit in the same period a year earlier, that report noted.

In February, the EU launched a probe against Shein focused on “illegal” products, including suspected child sexual abuse material. In May, Shein acquired San Francisco-based eco-friendly clothing retailer Everlane, a move that some analysts said was not the best fit. These details were reported by Arkansas Online.

**A listing delayed and downsized**

Shein had earlier explored listing its shares in New York and London, but shifting regulatory dynamics in both China and the West led the company to pivot to Hong Kong.

“Shein’s Hong Kong listing marks a new starting point,” said Leigh Gui, Shein’s chief financial officer, in a brief speech at the listing ceremony, as reported by Arkansas Online.

The company moved its headquarters from China to Singapore around 2021, but it has since re-emphasized its Chinese roots. “Guangdong is Shein’s roots, and the starting point of our journey,” founder Sky Xu said in a February speech, according to Arkansas Online.

Pivoting focus back to China highlighted the supply chain advantages Shein derives from the small-batch, fast-response manufacturing model that “only exists” in Guangdong, said William Ma of GROW Investment Group, as reported by Arkansas Online.

**Hong Kong market buoyed**

Despite the stock’s weak start, Shein’s listing is a positive for Hong Kong, which has been striving to maintain its role as a global financial hub after a downturn in 2023. The city’s stock exchange has raised more than $40 billion from IPOs so far this year, and there is a backlog of companies seeking to list, said Lorraine Tan at Morningstar, as reported by Arkansas Online.

Still, Shein’s current $26.5 billion valuation is a far cry from its peak. “Shein has probably missed its golden listing window due to the shift of momentum toward AI and tariffs, which can affect valuations and profitability,” said Gary Ng, a senior economist for Asia Pacific at French bank Natixis, according to Arkansas Online.