Shein Shares Tumble Up to 10% in Hong Kong Debut, Valuing Fast-Fashion Giant at a Fraction of Peak

HONG KONG — Shein’s publicly traded shares opened Tuesday with a jolt, falling as much as 10% minutes after the fast-fashion giant began trading on the Hong Kong Stock Exchange, before recovering to close nearly unchanged at HK$48.50 ($6.19).

The company priced its initial public offering at HK$48.56 ($6.19) per share, raising roughly $1.7 billion in one of the city’s largest new share sales this year. Yet the weak debut — with the stock dropping to below HK$44 before paring losses — left the Singapore-headquartered company valued at about $27 billion, a fraction of its peak valuation of nearly $100 billion in 2022.

“Shein’s Hong Kong listing marks a new starting point,” Chief Financial Officer Leigh Gui said in a short speech at the listing ceremony. He later added: “Let global consumers enjoy the sound of fashion.”

Founder and CEO Sky Xu, who declined to speak at the event, did not address questions from reporters, according to one report.

A four-year quest to go public that began with failed attempts in New York and London ended with Shein embracing its Chinese roots to list in Hong Kong. Launched in China in 2012 and headquartered in Singapore since around 2021, the company faced increasingly strict scrutiny from Beijing and regulators in the U.S. and Europe that ultimately blocked listings elsewhere.

**Tariff shock and a quarterly loss**

Investors were rattled by a string of external pressures that have hammered Shein’s low-price business model. The end of “de minimis” tariff exemptions in the U.S. and the European Union has raised duties on low-value parcels from China — the backbone of Shein’s direct-shipping model. Higher logistics costs partly due to the war in Iran have added further strain.

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

The company 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. Net income slid 39% last year, and Shein has said it expects first-half operating profit margin to be slightly lower than in the first quarter, hurt by higher customs duties, tariffs, fees and logistics costs in Europe and the Middle East.

The impact on user activity has been stark. “Daily active users in Europe have fallen around 45% since the EU scrapped its duty exemption on small parcels, and Temu has seen a similar drop,” said Josh Gilbert, lead analyst for Asia-Pacific at eToro. “This is less a Shein problem, but more so the end of an era for cheap cross-border shipping. The brand’s reach is unquestionable, but a large share of that loyalty has always belonged to the price tag.”

**Tepid demand and investor sentiment**

Demand for Shein’s stock during the IPO was subdued compared with high-profile offerings from the AI and robotics sectors. The retail tranche was subscribed 5.63 times, while the international portion was subscribed 2.59 times. Some Hong Kong IPOs have been hundreds of times oversubscribed.

“I think the weak debut shows that even after the huge valuation reset, investors still don’t see Shein as obviously cheap,” said Charu Chanana, chief investment strategist at Saxo. She noted the stock traded at about 15 times forward earnings, more than double the multiple for PDD, owner of rival Temu, meaning “investors were being asked to pay a premium despite weaker growth visibility and significant regulatory and trade risks.”

“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.

Cornerstone investors took about one-fifth of the IPO and are locked up for six months, leaving roughly 5% freely tradable. The IPO helped compensate early investors who had invested at much higher valuations: Shein has agreed to make cash payments totaling about $3.5 billion and share adjustments to some preferred shareholders. “This IPO is not just a fundraising event; it is also, and probably more of, a capital-structure event,” said Jianggan Li, CEO of consultancy Momentum Works.

**Regulatory headwinds mount beyond tariffs**

Shein faces probes on multiple fronts. In February, the European Union launched an investigation into “illegal” products on its platform, including alleged child sexual abuse material. The European Commission is also examining the company’s handling of such products, the potentially addictive design of its platform and transparency of its recommendation systems.

In the U.S., Shein has disclosed an ongoing Federal Trade Commission consumer protection investigation that could result in significant penalties.

A separate regulatory challenge came from France, which on Tuesday began imposing penalties on some fast-fashion items to curb the surge in cheap sales. The penalties, calculated based on number of products sold, prices and repairability, range from €0.25 for boxer shorts to €12 for a coat, capped at 50% of the product’s pre-tax sales price. China’s commerce ministry has called the French law discriminatory and a trade barrier, saying it could violate World Trade Organization principles.

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

**Big-name cornerstone investors**

Despite the challenging debut, several high-profile investors participated in the IPO. A Monday filing showed billionaire Michael Bloomberg’s family office Willett Advisors, French billionaire entrepreneur Xavier Niel, and Microsoft were among cornerstone investors. Indian billionaire Mukesh Ambani’s Reliance also bought more shares, as did Bolivian American billionaire Marcelo Claure’s Claure Group and the SoftBank Vision Fund. The amount sold in the IPO represents about 6.6% of Shein’s enlarged share capital.

**Hong Kong’s silver lining**

Shein’s listing offered a boost for Hong Kong, which has been making increasing efforts to retain its role as a global financial hub after a downturn in 2023. The stock exchange has experienced a strong year for IPOs so far, raising more than $40 billion. “There is a backlog of companies seeking to list there,” said Lorraine Tan at investment research firm Morningstar.