Online fast-fashion retailer Shein is reportedly targeting a company valuation of around $25 billion for its planned Hong Kong IPO, a substantial drop from its peak private market valuation of nearly $100 billion just four years ago. The company aims to raise up to $1.77 billion through the listing, offering up to 8% of its total shares. This reduced valuation reflects challenges such as slower growth, increased shipping and marketing costs, and regulatory hurdles impacting investor appetite.
Shein's financial performance has weakened recently. While revenue increased by 8% to $41.8 billion in 2025, net profit fell by 38.7% from $3.37 billion to $2.06 billion. The first quarter of 2026 saw a net loss of $99 million, compared to a $395 million profit a year prior, despite a slight 1.1% revenue increase to $9.05 billion. This loss includes a $328 million accounting charge, but underlying sales were also affected, particularly in the US, where revenue dropped from $2.38 billion to $2.04 billion.
A major contributing factor to the slowdown is the removal of "de minimis" tariff exemptions on small packages in key markets. The US eliminated this exemption in May 2025, which Shein used to ship products directly from China, significantly impacting its US sales. The EU followed suit, imposing a €3 duty on small parcels, which Shein fears could have a "material adverse effect" on its business, given that Europe accounted for about a third of its sales last year. The UK is also planning similar charges. These changes are forcing Shein to consider raising prices, potentially eroding its competitive advantage built on low costs and impulse purchases.
Beyond financial performance, the IPO has faced scrutiny over Shein's supply chain and labor practices, with concerns about working conditions. There have also been criticisms regarding the lack of transparency surrounding its founder and CEO, Sky Xu. Previous attempts to list in New York and London were unsuccessful due to these regulatory and reputational challenges. The current valuation of under $30 billion is significantly lower than the $100 billion market value once anticipated for a New York listing, indicating that Western scrutiny has diminished Shein's appeal ahead of its public debut.
