Shein Global Holdings Ltd. is aiming for a valuation between $26 billion and $27 billion in its upcoming Hong Kong initial public offering, a substantial decrease from its 2022 peak valuation of $100 billion. The fast-fashion retailer plans to raise approximately $2 billion through the IPO, with existing shareholders potentially selling up to half of the offering. This valuation target reflects pushback from investors after Shein initially gauged interest at a $30 billion valuation.
The company, originally founded in China and now headquartered in Singapore, is nearing the completion of its IPO journey, following unsuccessful attempts to list in New York and London. Its valuation has declined due to slowed growth, increased tariffs, and heightened competition, particularly from PDD Holdings Inc.'s Temu. For instance, Shein recorded a loss of $99 million in the first quarter of this year, a sharp contrast to a $395 million profit in the same period last year, and also reported slowing revenue growth.
Shein's business model, which involves offering low-priced, trend-driven clothing directly from suppliers, has been impacted by rising material costs from U.S. tariffs and geopolitical events. Further challenges are anticipated from a new European Union levy on small packages. Goldman Sachs Group Inc., Morgan Stanley, and JPMorgan Chase & Co. are managing the IPO. To mitigate investor concerns regarding the lower IPO valuation compared to previous private fundraising rounds, Shein is considering options such as cash payouts and additional shares for some early investors. A $25 billion valuation has also been cited in other reports, marking a dramatic reset from past figures.
