Shein plans to raise up to $1.8 billion in an initial public offering in Hong Kong that values the fast-fashion retailer at roughly 70% below its peak in the private market four years ago, reflecting a slower growth outlook expected to weigh on investor demand.
The long-awaited Hong Kong listing comes after Shein, known for selling $5 dresses and $10 jeans to shoppers in about 160 countries, abandoned plans to go public in New York and London over the past four years.
On Monday, Shein began selling 280 million shares at a price between HK$47.60 and HK$49.50 each, according to company documents, raising up to HK$13.86 billion ($1.77 billion) and valuing the company at about $27 billion at the top of that range.
Valuation slashed amid rising competition
The steep drop in valuation comes as tariffs, intensifying competition from rivals such as PDD-owned Temu, and rising costs cloud Shein's prospects.
Shein was valued at $64 billion in 2023 and again in April 2024. Reuters reported exclusively last week that the IPO would value the company at about a quarter of the $100 billion it was worth in 2022.
Even after the steep cut, analysts said mounting difficulties in Shein's key markets, the United States and Europe, would still weigh on its fundraising.
Lorraine Tan, Morningstar's Asia head of equity research, based in Singapore, said the drop in Shein's valuation largely reflected how the company's outlook had changed compared with two or three years ago, when its IPO was first considered. She said global investor interest in Shein had likely diminished as a result, leading to the lower listing price.
At a $27 billion market value, Shein is priced at roughly 0.7 times projected revenue, higher than European rival Zalando at 0.4 times, but below H&M and Inditex, which trade at about 1.1 and 4.0 times, respectively.
Winston Ma, an adjunct professor at New York University's law school and former head of North America for Chinese sovereign wealth fund CIC, said public investors were no longer paying for rapid growth. He said they were instead backing a consolidated cross-border platform that now has to defend its profit margins against trade tariffs, higher compliance costs and regulatory scrutiny in both the United States and China.
Growth slows sharply
The company, founded in China and headquartered in Singapore, will announce the final price of its IPO on August 31 and begin trading shares on September 1.
Anchor investors led by existing shareholders Boyu, Tiger Global and General Atlantic have subscribed for about $383 million in Shein shares, according to the prospectus. Tencent, Greenwoods, Taikang Life and UBS Asset Management are also taking part in the share program.
Shein said it would use about 80% of the proceeds to improve its technology and strengthen its brand and global presence.
According to the prospectus, the company has agreed to pay up to about $3.5 billion in cash to certain investors who bought special shares in earlier private funding rounds.
Shares sold in the IPO will carry one-tenth the voting rights of shares held by the company's founders. Co-founders Sky Yangtian Xu, Maggie Gu, Molly Miao and Tony Ren will control 90% of Shein's voting rights, the prospectus shows.
Slower revenue growth and declining core profits are weighing on Shein's business, while shrinking margins have fuelled concern that its expansion is struggling under higher trade costs, tighter regulatory enforcement and intensifying competition.
Shein said in its prospectus that it expects revenue growth in the first half of 2026 to be in line with the 1.1% growth recorded in the first quarter, while its operating margin is expected to be slightly below the first-quarter level. The company attributed this to new European import fees, pricing pressure and weaker demand in the Middle East linked to the war with Iran.
Dickie Wong, executive director of research at uSMART Securities in Hong Kong, said he was not very optimistic about Shein's IPO, noting that the company's growth had already slowed considerably. He said he expected the subscriber response to be only average and, despite the sharp cut in valuation, was not recommending investors subscribe given the slower growth outlook and regulatory pressures.
Rui Ma, a China technology analyst and founder of the research platform Tech Buzz China, said the main concern was whether Shein could keep growing profitably as acquiring new customers becomes increasingly expensive.
Losses, tariffs and legal scrutiny
Shein posted a quarterly loss of $99 million after the United States removed a tax exemption for small imported packages, along with a $328 million accounting write-down tied to the fair value of redeemable convertible preferred shares following an accounting change.
The so-called de minimis rule had allowed online orders from China worth less than $800 to enter the United States tax-free. Shein has previously said Chinese-origin products it sells directly or through its marketplace and ships to the United States are now subject to tax rates ranging from 10% to 87.5%.
In its prospectus, Shein said it faces a "significantly higher level of taxes and fees" in the United States, which it said directly caused a 14.3% drop in US revenue during the first quarter of this year.
On Monday, rival PDD reported quarterly revenue below expectations, citing strong competition and rising regulatory pressures abroad.
Shein said it had set aside about $80 million as of the end of March for ongoing legal and regulatory proceedings. These include an investigation by the US Federal Trade Commission that could result in significant payments, a European Union Digital Services Act investigation, and data privacy lawsuits in France and Ireland.
Shein's acquisition of American clothing brand Everlane in May for $80 million is now under national security review by the Committee on Foreign Investment in the United States, according to a person familiar with the matter.
Shein did not immediately respond to Reuters' request for comment.
The IPO is the largest new share sale in Hong Kong in 2026, surpassing the $751 million offering from self-driving technology company Momenta Global in July.
