Shein finally appears close to securing the public listing it has chased for years. Getting investors to accept the price, however, may prove harder than getting the deal onto the Hong Kong Stock Exchange.
The online fashion retailer is reportedly seeking a valuation of between $40 billion and $50 billion for its Hong Kong initial public offering. That figure already represents a steep retreat from Shein’s earlier private-market highs. More importantly, the company’s newly disclosed financial results show a business that remains enormous but no longer carries the clean hyper-growth story investors once associated with it.
Shein’s IPO Arrives as Growth Begins to Lose Speed
Shein generated approximately $41.8 billion in revenue during 2025, an increase of around 8% from the previous year. That would look impressive for most retailers. For a company asking the market to value it like a technology-led global growth platform, though, single-digit expansion changes the conversation.
Profitability weakened at the same time. Net income dropped 39% to $2.06 billion in 2025. During the first quarter of 2026, Shein recorded a $99 million loss after generating $9 billion in revenue. Quarterly revenue increased by only 1.1% year over year.
The quarterly loss was not entirely operational. Shein booked a $328 million non-cash fair-value charge connected to convertible redeemable preferred shares following an accounting change. Still, investors are unlikely to ignore the broader pattern. Operating profit fell 26% during the quarter, while the company’s operating margin slipped from 3.9% to 2.9%.
That margin may become one of the most uncomfortable numbers in the prospectus. Shein moves an extraordinary volume of clothing and other products across borders, yet it keeps only a thin slice of revenue as operating profit. Small changes in shipping, tariffs, fulfilment or customer acquisition costs can quickly eat into that slice.
The Technology Story Is Becoming Harder to Sell
Shein built much of its reputation around data. Its platform tracks fashion demand, tests products in small batches and feeds purchasing signals back to a large supplier network. That approach helped the company produce new styles quickly without relying entirely on the traditional seasonal retail calendar.
It was easy to describe the model as a technology platform during the company’s fastest growth years. Public investors may view it differently now.
Shein still depends on physical manufacturing, international shipping, warehouses, logistics partners and low-cost parcel rules. Its software can predict demand, but it cannot remove tariffs. Algorithms may reduce excess inventory, yet they cannot prevent governments from introducing new import fees.
Winston Ma, executive director of the Global Public Investment Funds Forum, told Reuters that investors could begin valuing Shein less like a pure hyper-growth technology company and more like a retail and logistics operation dealing with difficult global trade conditions.
That distinction matters. Technology platforms can command generous revenue multiples when markets expect rapid expansion and improving margins. Retailers normally face more cautious valuations because their businesses remain exposed to inventory, fulfilment expenses, competition and changing consumer habits.
The End of the US De Minimis Exemption Has Hurt
Shein’s model benefited heavily from the US de minimis exemption, which allowed qualifying low-value parcels to enter the country without standard import duties. The removal of that exemption increased costs and weakened one of the economic advantages behind direct-to-consumer shipments from overseas suppliers.
Shein said the change affected sales growth and raised expenses. The company is considering several responses, including higher prices in the United States. That may protect margins, but it also risks weakening the low-price appeal that helped Shein grow so quickly in the first place.
The financial impact is already visible. US revenue fell 14% year over year to $2 billion during the first quarter of 2026. The country’s contribution to Shein’s total revenue dropped from 26.6% to 22.5%.
This is the awkward part of the strategy. Absorbing the higher costs hurts profitability. Passing them to customers could reduce demand. Neither choice gives Shein an easy path back to faster growth.
Europe Is Becoming Another Pressure Point
Europe has overtaken the United States as Shein’s largest market. Revenue from the region rose from $10.2 billion in 2023 to $14.8 billion in 2025, accounting for 35.4% of the company’s total revenue.
That growth may now face similar obstacles.
European policymakers have introduced new charges and tighter rules covering low-value e-commerce imports. Shein warned that the effect in Europe could match or even exceed what it experienced after the US changed its de minimis treatment.
The company is therefore facing pressure in its two most important developed markets at roughly the same time. Together, the United States and Europe generate more than half of Shein’s worldwide revenue. If growth remains flat across both regions, the company will need emerging markets to carry much more of the expansion story.
Shein Is Growing Faster Outside the US and Europe
Markets outside the United States and Europe may become the strongest part of Shein’s case to investors.
Revenue from the company’s “Rest of the World” segment increased from $12.4 billion in 2023 to $16.9 billion in 2025. That segment represented 40.5% of total revenue last year, making it larger than either Europe or the United States individually.
The numbers suggest Shein still has room to expand across Latin America, the Middle East and other regions where online shopping adoption continues to grow. The company is also broadening its product range beyond clothing. Apparel accounted for 63.8% of revenue in 2025, down from 68.8% in 2023, as sales of other goods climbed to $15.1 billion.
Service revenue provides another interesting angle. It increased from $868 million to $4.7 billion, although physical product sales still generated nearly 90% of Shein’s 2025 revenue. Investors will watch whether marketplace services and other higher-margin activities can eventually make the business less dependent on selling inexpensive goods one parcel at a time.
A $50 Billion Valuation Is Already a Major Discount
Shein’s valuation has been moving downward for several years.
A 2022 funding round valued the company at $98.2 billion. Another fundraising round in 2024 reduced that figure to approximately $64 billion. The proposed Hong Kong IPO valuation of $40 billion to $50 billion would mark another substantial cut.
That discount may look attractive compared with Shein’s former valuation. Investors will not necessarily use the old figure as their starting point, though. They will examine current growth, margins, regulatory exposure and the amount of money the company must spend to defend its position.
A valuation of $50 billion would equal roughly 1.2 times Shein’s 2025 revenue. That does not look extreme for a growing digital commerce platform. The argument becomes less comfortable when the same company posts slowing sales, falling profits and an operating margin below 3%.
The lower end of the range may be easier to defend. Even there, investors may demand enough upside to compensate for tariff changes, supply-chain scrutiny and stronger competition across low-cost e-commerce.
Hong Kong Solves the Listing Problem, Not the Business Problem
Shein previously explored listings in New York and London. Regulatory concerns, geopolitical tensions and scrutiny of its supply chain complicated those plans. Hong Kong has now offered a more realistic route to the public market.
The exchange may solve where Shein can list. It does not automatically answer what the company should be worth.
Shein still operates one of the world’s largest online shopping platforms. It has a huge customer base, a sophisticated demand system and a supplier network that traditional retailers have struggled to match. None of that disappears because one quarter produced a loss.
The market has simply become less willing to pay for the old version of the story.
Investors considering the Shein Hong Kong IPO valuation will want evidence that the company can keep growing without relying on favourable low-value import rules. They will also want to see whether Shein can protect its prices, improve margins and turn international expansion into durable profit.
The company spent years trying to reach the public market. Now it has to prove that its business can handle the public market’s questions.
Sources
- Reuters – Shein will struggle to justify $40–50 billion Hong Kong IPO valuation
- Reuters – Shein reveals financials and valuation in Hong Kong IPO filings
- The Straits Times – Shein will struggle to justify up to US$50 billion valuation