HONG KONG – Shein shares dropped roughly 10% in their Hong Kong stock market debut on Tuesday, a rocky start for the fast-fashion e-commerce giant after a prolonged wait to bring its shares to public investors.
The online retailer raised about $1.7 billion in its Hong Kong initial public offering, pricing the deal at HK$48.56 ($6.19) per share in one of the city’s largest new share sales of the year. “Shein’s Hong Kong listing marks a new starting point,” Leigh Gui, Shein’s chief financial officer, said in brief remarks at the listing ceremony.
The early market reaction was muted, however, with the stock sliding to around HK$44 in morning trading.
Shein has built its global following on ultra-fast, low-cost fashion, shipping trend-driven clothing from China to Western shoppers in a matter of days. But the end of “de minimis” tariff exemptions in the U.S. and the European Union has increased duties on low-value parcels from China, including Shein products. At the same time, higher logistics costs, driven in part by the war in Iran, have put additional pressure on the company’s low-price model and profitability.
Those rising tariff costs have pushed Shein to increase prices, “cutting into its main advantage,” said Jacob Cooke, CEO of WPIC Marketing + Technologies.
The financial strain has already shown up in its results. Shein posted a $99 million loss in the first quarter of this year, reversing from a $395 million profit in the same period a year earlier.
Shein, pronounced “she-in,” had previously considered public listings in New York and London. The company moved its headquarters from China to Singapore around 2021, but mounting scrutiny from Beijing as well as regulators in the U.S. and Europe ultimately steered it toward Hong Kong and a more direct embrace of its Chinese roots.
Founded in China in 2012, Shein long maintained much of its operations in the southern province of Guangdong before relocating its corporate headquarters overseas.
“Guangdong is Shein’s roots, and the starting point of our journey,” its founder Sky Xu said in a speech in February.
Pivoting its focus back to China also highlighted the advantages Shein derives from the supply chain system that “only exists” in Guangdong, said William Ma at GROW Investment Group, referring to its small-batch, fast response manufacturing model.
Shein has hit other roadblocks in expanding in Europe. In February, the EU launched a probe against Shein in February with a focus on “illegal” products, including alleged child sexual abuse material.
In May, Shein acquired San Francisco-based eco-friendly clothing retailer Everlane, a move that some analysts said was not the best fit.
The company’s market value was roughly $27 billion as it listed in Hong Kong, a fraction of its peak valuation a few years ago.
“Shein has probably missed its golden listing window due to the shift of momentum toward AI and tariffs, which can affect valuations and profitability,” said Gary Ng, a senior economist for Asia Pacific at French bank Natixis.
Still, Shein’s listing is welcome news for Hong Kong, as the Chinese territory makes increasing efforts to hold onto its role as a global financial hub following a downturn in 2023.
Hong Kong’s stock exchange has experienced a strong year for IPOS so far, raising more than $40 billion. And there is a backlog of companies seeking to list there, said Lorraine Tan at investment research firm Morningstar.
