Shein Global Holdings Ltd. shares fell as much as 17 percent in grey market trading ahead of the company’s formal debut on the Hong Kong stock exchange on Tuesday.
Shares of the fast-fashion retailer fell to as low as 40.04 Hong Kong dollars ($5.10) apiece, compared with its initial public offer price of 48.56 Hong Kong dollars, according to a trading platform operated by KGI Securities Co. More than 63 million shares changed hands.
The fast-fashion retailer raised $1.7 billion in Hong Kong, giving it a market value of $26 billion that’s a far cry from the $100 billion it once commanded. Still, questions about its upside in the face of slowing growth and tariff headwinds threaten to weigh on the stock as it prepares to debut on Tuesday.
Shein’s long-awaited IPO valued the company at over 15 times forward earnings, calculations based on Bloomberg Intelligence’s estimates show. That’s about double the 7.4 times ratio commanded by its competitor Temu’s parent PDD Holdings Inc. and above the 10.7 times multiple for Hong Kong’s benchmark Hang Seng Index.
Shein’s growth has slowed markedly over the past year due to tariffs, while intensifying competition from Temu in key markets including the US and Europe also impacted business. Shein’s full year sales are set to grow 3.4 percent to $44.3 billion next year, with net income of $1.7 billion, according to Bloomberg Intelligence.
Founded in China and now based in Singapore, Shein has built a global fast-fashion giant by using a data-driven supply chain capable of rapidly producing and shipping low-cost apparel directly to consumers. The company emerged as one of the biggest beneficiaries of the pandemic-era e-commerce boom, with its valuation soaring to nearly $100 billion in 2022.
Shein raised $1.7 billion in Hong Kong, giving it a market value of $26 billion that’s a far cry from the $100 billion it once commanded. (Shutterstock)
At 15 times price over earnings, “the stock is already pricing in part of a growth comeback before it has delivered one,” said Gary Tan, a portfolio manager at Allspring Global Investments. “Investor appetite post-listing is likely to be cautious until management proves its business model reset can reignite growth.”
Shein’s Hong Kong listing will test whether fast‑fashion and internet retailers can still attract capital in an investing climate dominated by artificial intelligence fervor. Shein’s valuation also sits alongside that of Alibaba Group Holding Ltd., the Chinese e‑commerce titan now aggressively pivoting into artificial intelligence. Alibaba’s Hong Kong shares are valued at 15 times 12-month earnings.
“I’m not quite sure what their unique advantages are that’d say I would have to have this one,” said Edmund Harriss, chief investment officer at Guinness Global Investors in London. “I suppose I’m quite happy with my 10 percent Alibaba positions in a China fund. They’re incumbents. I know how they operate these days and they are subject to the same competitive pressures.”