2/9/26
Shein Just IPO'd at a Quarter of Its Old Valuation - Now Comes the Hard Part
Shein Just IPO'd at a Quarter of Its Old Valuation - Now Comes the Hard Part.
Shein finally went public this week, listing in Hong Kong after years of failed attempts in New York and London. The IPO raised around $1.74 billion, priced at the bottom of its range, and the market's reaction said everything.
Shares fell as much as 10% on day one, clawed back to close near the issue price, then fell again on day two.
For a company that was valued at $100 billion in private markets just four years ago, listing at $26.5 billion - roughly a quarter of that peak - is a big comedown.
Here's what happened, and what it tells us about the business.
The Long Road to Listing
Shein's path to a public listing has been unusually complicated for a company of its size.
The company first tried to list in New York in 2023, then pivoted to London. That attempt fell apart when the Chinese government withheld approval over concerns about what Shein would have to disclose about its supply chain as a London-listed company.
Hong Kong became the last option standing.
The timing wasn't ideal. Shein reported a net loss of $99 million in the first quarter of 2026, compared with a $395 million profit in the same quarter last year. The company attributed the loss mostly to accounting adjustments on convertible shares rather than the underlying business, but the headline number didn't help sentiment heading into the listing.
IPO shares were priced below the top of the range, at HK$48.56 against a cap of HK$49.5, fell as much as 10% on day one, and closed almost flat, at HK$48.50.
The company raised around $1.74 billion from the IPO listing, a fraction of what it once hoped to raise. It plans to spend 40% of the proceeds on technology, 40% on brand awareness and global expansion, and the rest on corporate responsibility and general purposes.
That corporate responsibility line item is telling. Shein's brand has taken significant reputational hits in recent years, and rebuilding it is now an important strategic priority.
What Went Wrong
Shein built its business on two things: an extraordinarily responsive Chinese supply chain that could add nearly 4,700 new styles a day, and the ability to ship small packages cheaply to Western consumers under de minimis tax exemptions, which allowed parcels below a certain value to enter countries duty-free.
Both of those advantages have been significantly eroded.
The US has clamped down on the de minimis exemption that helped fuel Shein's rise in America. The EU has also introduced a €3 customs duty on many low-value e-commerce imports from outside the bloc.
Plus, France has fined the company over consumer-protection and environmental-disclosure issues, while also stepping up scrutiny after illegal products were found on its third-party marketplace. The EU is also scrutinising Shein under its Digital Services Act, following fines of €200 million for Temu and €550 million for AliExpress in similar cases.
But tegulation isn't the only thing squeezing Shein. TikTok Shop has built the same "gamified discount hunting" experience that made Shein and Temu popular, according to retail analyst Bryan Gildenberg, but wrapped inside an app people already open to be entertained.
In France specifically, Shein's attempt to open its first permanent physical store last year triggered protests and political backlash after its marketplace was found to be selling illegal items including weapons and child-like sex dolls. French authorities moved to suspend the marketplace section of Shein’s site, while Shein itself paused it.
US revenue fell in the first quarter, and Europe, its other crucial market, has become as much a legal battleground as a commercial one.
What Shein Is Doing About It
Shein's answer is to sell less of its own stuff, and host more of everyone else's.
Its third-party marketplace, including its Shein Xcelerator programme, is becoming more important, allowing outside brands and designers to use Shein's supply chain, logistics, and sales infrastructure while Shein earns fees and commissions.
That's good for margins in a business where margins are already thin, and it reduces dependence on Chinese manufacturing, which has become both a regulatory and a reputational liability.
It's also been buying labels outright, picking up Missguided in 2023 and the sustainability-focused retailer Everlane this year, though the deal has not been formally confirmed by the companies.
Owning recognisable local brands could help Shein expand into bricks-and-mortar retail and reduce its reliance on a direct-to-consumer model that was built around now-curtailed tax advantages.
It’s also building out local logistics - it opened a warehouse in Poland in December, as part of a longer-term effort to hold more stock closer to European customers and reduce reliance on small parcels shipped directly from China.
What This Means for You
Shein isn't available on most retail investment platforms yet, so this probably isn't a direct portfolio decision for most readers. But the story is instructive regardless.
It shows that fast growth and a high valuation don't always mean a business is built on solid foundations. Shein grew to a $100 billion valuation in large part by exploiting regulatory gaps that governments eventually closed.
Investors aren't convinced Shein can adapt quickly enough to justify even its reduced $26.5 billion valuation, and the first two days of trading showed it.
When you're thinking about any fast-growing company, it's worth asking how much of its edge depends on rules staying exactly as they are.
Cover image: Jorge Silva/Reuters/Ritzau Scanpix
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