Shein's stock plummeted 10% in its first day of trading following its IPO in Hong Kong

Shares of Asian fast-fashion retailer Shein fell 10% in the first minutes of trading on September 1 in Hong Kong—to 43.7 Hong Kong dollars (HKD) from an offering price of 48.56 Hong Kong dollars, according to the Financial Times. The stock then recovered some of its losses. The company listed the shares in the middle of the announced price range, raised 13.6 billion Hong Kong dollars ($1.7 billion), and was valued at just over $26 billion.

Shein’s lackluster stock market debut stands in stark contrast to other recent Asian IPOs: memory chip maker CXMT rose 466% on its first day of trading, while humanoid robot developer Unitree jumped 460%. If the decline in the share price continues until the end of the first trading session, Goldman Sachs, which is responsible for stabilizing the share price after the IPO, will likely begin buying back Shein shares on the open market, the FT notes.

Demand for Shein shares shows where investors in China and Hong Kong are focusing their attention right now, says Chris Weston, head of research at Pepperstone Group. “The strongest interest remains in AI, robotics, and memory chips. It is in these areas that investors see structural growth, where demand is concentrated, and where China is placing its main strategic bet,” Reuters quotes him as saying.

“The weak debut shows that even after a massive revaluation, investors still don’t consider Shein to be obviously undervalued,” noted Charu Chanana, chief investment strategist at Saxo Bank. According to her, Shein went public with a forward P/E ratio of 15 — “more than twice that of [Temu’s owner] PDD.” In other words, investors were asked to pay a premium “despite less predictable growth and significant regulatory and trade risks.” Such a combination, Chanana adds, “is hard to justify.”

A Saxo Bank strategist explained that PDD offers access to a larger e-commerce platform with a more compelling growth track record, whereas Shein has faced higher tariffs, the loss of duty-free status for small packages entering the U.S., fierce competition from Temu and AliExpress, and ongoing regulatory scrutiny. “Shein’s business model has deteriorated alongside its slowing growth. As a result, the market is increasingly viewing Shein less as a disruptive, fast-growing platform and more as a retailer facing margin pressure and operational challenges,” Chanana concludes.

Mike Luen, an investment manager at Hong Kong-based Wocom Securities, said that given the significant deterioration in Shein’s operating metrics, even the sharply reduced valuation is not attractive enough for him, according to Nikkei Asia.

Pandemic-era lockdowns and the popularity on social media of unboxing videos featuring Shein purchases attracted young shoppers to the company’s affordable clothing and earned it a valuation of about $100 billion following a private funding round in 2022, the Financial Times notes. Later that same year, investor enthusiasm began to wane, and the next funding round was valued at $66 billion.

Shein’s attempts to go public on the New York and London stock exchanges fell through due to opposition from politicians and regulators who were scrutinizing the company’s Chinese supply chain. The retailer with Chinese roots has also become the subject of trade investigations in the EU and the U.S.

Shein’s financial metrics have also deteriorated. The company’s net income last year fell to $2 billion after peaking at $3.4 billion the year before, and its net profit margin dropped from 8.7% to 4.9%. In the first quarter of this year, Shein posted a loss of $99 million and warned of risks related to trade disputes between the U.S. and the EU. In May 2025, Washington repealed a duty exemption for low-value shipments, which had allowed Shein to ship clothing directly to American customers without paying duties.

Despite seeing its valuation drop by a factor of four, Shein remains one of the world’s largest fashion groups: its current market capitalization is on par with that of Sweden’s H&M. Both companies are worth significantly less than Inditex, the owner of Zara, which is valued at $213 billion.

This article was AI-translated and verified by a human editor