Shein's shares were trading at a discount on the gray market, a platform for unofficial transactions, as the company prepared for its initial public offering on the Hong Kong Stock Exchange. The unofficial trading priced Shein's valuation at roughly $23.5 billion to $24 billion, which is below the IPO's target range of $25.7 billion to $26.8 billion and substantially lower than its private market valuation peaks of $98.2 billion in 2022 and $64 billion in 2023.
This discounted gray market trading underscores investor apprehension regarding Shein's future growth. Despite the IPO order book being fully covered, retail demand was notably less enthusiastic. Analysts point to several factors dampening sentiment, including slower sales growth, weakened profit margins, increased trade costs due to changes in U.S. import duty exemptions, and intense competition from rivals like Temu and Amazon.
The IPO is set to raise up to $1.8 billion, with 280 million shares offered at HK$47.6 to HK$49.5 each. However, the company faces a significant challenge with legacy financing features, as it could pay out up to $3.5 billion in cash and additional shares to certain preferred investors whose protections were triggered by the lower IPO valuation. This potential outflow is roughly twice the size of the new equity capital being raised through the listing.
Cornerstone investors, including existing shareholders Boyu Capital, Tiger Global, and General Atlantic, have committed approximately $383 million, representing about 22% of the $1.73 billion offering. Despite this institutional support, concerns about ethical issues, working conditions, intellectual property violations, and a perceived loss of momentum among younger shoppers continue to weigh on investor confidence. The company's revenue growth decelerated to 8% in 2025 from 20.7% a year earlier, and it recorded a $99 million loss in early 2026.
