Shein Shares Slide Further in Hong Kong After Lacklustre Debut

Hong Kong – Shein shares fell for a second straight session Wednesday, extending the disappointment from a muted market debut and underscoring the headwinds facing the online fast-fashion giant. The stock was trading at HK$46.94 in early trade, down more than 3% from its HK$48.56 issuance price, according to reports from Thestar and The Straits Times. Trading data from Investing.com showed the decline reaching more than 5% at one point.

The shares had tumbled as much as 10% on Tuesday before recovering to near the offer price, a recovery that a source and analysts attributed to so-called stabilisation measures commonly applied to large listings to prevent sharp first-day declines.

Shein raised $1.7 billion in its long-awaited Hong Kong initial public offering, pricing the company at a valuation of $26.5 billion. That is roughly a quarter of its peak valuation of nearly $100 billion in 2022, reflecting a sharp reassessment of its prospects.

Investors and analysts pointed to three main pressures: higher import duties in key markets, growing regulatory risks, and intensified competition. The end of “de minimis” tariff exemptions in the United States and the European Union has raised duties on low-value parcels from China, including Shein’s products. Tariff costs have forced Shein to raise prices, “cutting into its main advantage,” said Jacob Cooke, CEO of WPIC Marketing + Technologies, as reported by the Arkansas Democrat-Gazette (arkansasonline.com). Cooke’s remark appeared in coverage of the listing.

“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, in comments carried by both Thestar and The Straits Times. “Revenue growth has slowed over the past few years and margins are under pressure, while higher tariffs and customs costs in the US and EU are weakening the economics of its low-cost cross-border model.”

Additional challenges surfaced in the company’s financial reports. 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, according to arkansasonline. Higher logistics costs partly due to the war in Iran also have squeezed the company’s low-price business model.

The company has also faced regulatory hurdles in Europe. The European Union launched a probe in February focusing on “illegal” products, including alleged child sexual abuse material. In May, Shein acquired eco-friendly clothing retailer Everlane of San Francisco, a move some analysts viewed as a poor fit, per the same report.

Shein’s chief financial officer, Leigh Gui, struck a positive tone at the listing ceremony. “Shein’s Hong Kong listing marks a new starting point,” Gui said, according to arkansasonline. Founder Sky Xu, in a February speech, said “Guangdong is Shein’s roots, and the starting point of our journey.” The company, launched in China in 2012, shifted its corporate headquarters to Singapore around 2021 but has pivoted attention back to its Chinese supply chain advantages. “Only exists” in Guangdong, noted William Ma of GROW Investment Group, referring to Shein’s small-batch, fast-response manufacturing model.

The company had previously explored listings in New York and London, but increasing scrutiny from Beijing and regulators in the U.S. and Europe led it to switch to Hong Kong.

“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, senior economist for Asia Pacific at Natixis, as quoted by arkansasonline.

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