Shein, the China-founded fast-fashion retailer, experienced a difficult Hong Kong debut, with its shares plunging as much as 10% from their initial offering price. The stock opened flat at HK$48.56 (approximately $6.19) but quickly fell to HK$43.72 before paring some losses to trade around 5% lower by midday. This subdued performance follows a long delay in the company's plans to go public and comes after a significant reduction in its valuation, which had fallen from a peak of nearly $100 billion in 2022 to $26.5 billion at the time of the IPO.
The company raised $1.7 billion in its initial public offering by selling 280 million shares at HK$48.56 each. This marked one of Hong Kong's largest new share sales of the year. Despite the financial milestone, the market reaction was negative, with heavy selling pressure in early trading. Shein's Chief Financial Officer, Leigh Gui, spoke at the listing ceremony, emphasizing a new beginning for the company and its commitment to innovation, compliance, transparency, and ESG principles.
Investor caution appears to stem from various factors, including increased competition, geopolitical pressures, and questions surrounding the company's business prospects. The IPO was oversubscribed 4.6 times in Hong Kong and 1.6 times internationally, yet grey market trading prior to the official debut saw shares plunge as much as 28%. The fall underscores investor skepticism regarding Shein's value as a consumer play, especially as the end of "de minimis" tariff exemptions in the U.S. and EU and rising logistics costs could impact its ultra-affordable business model.
