Chinese fast-fashion giant Shein landed on the Hong Kong Stock Exchange this Tuesday after a long and arduous journey. The deal, which closed with a valuation of approximately $26.500 billion (around €22.850 billion), represents a significant blow to the expectations the company had generated during its heyday. It's a far cry from the nearly $100.000 billion valuation it reached in 2022, when the market still saw it as the great disruptor of the textile sector.
The initial public offering (IPO), which involves the placement of approximately 280 million shares at a price of HK$48,56 (€5,35) per share, allows Shein to raise around €1.500 billion. However, the debut comes at a delicate time: the company faces tariffs in its two main markets, increasingly fierce competition, and results that are already showing signs of slowing. Even so, the firm founded by Chris Xu in 2012 remains one of the most important players in the global fashion e-commerce sector.
A valuation that plummets by 73%
The final figure for the transaction fell far short of the $98.200 billion valuation Shein reached after its 2022 funding round. The 73% drop in valuation reflects the changing landscape for the company, which has seen its revenue stagnate and its margins shrink. According to the prospectus, the firm will raise approximately $1.800 billion gross, although after deducting expenses, the net amount is around €1.455 billion.
The consultancy firm Moby has described the operation as "too little, too late," while the website 36Kr suggests that Shein is using this exit strategy to prevent its main investors from redeeming their shares, which would jeopardize its liquidity. The compensation for these strategic investors is one of the most striking aspects: the company could pay out up to $3.500 billion in stock and cash to compensate them for the drop in valuation, a figure that practically doubles what it expects to raise on the stock market.
The difficult context in the United States and Europe
Shein faces a challenging landscape in its two main markets. The United States accounts for 24% of its revenue and Europe for 35%, but both regions have eliminated the tariff exemptions for low-value packages that had supported its business model for years. In the US, revenue already fell by 14% in the first quarter , and the company has warned that it will pass on the additional costs to customers. In Europe, the implementation of a €3 fee per order on July 1st has increased the cost of operations, and Shein expects a "negative short-term impact" on its sales.
The pressure on margins is evident: net profit as a percentage of sales fell from 8,7% to 4,9% in 2025, weighed down by increased logistics and advertising costs. Competition from Temu and traditional giants like Inditex is relentless, and the war in the Middle East has driven up transport costs. IG analyst Axel Rudolph summarizes the situation: "slower growth, margins under pressure, higher logistics costs, tariffs, stricter regulations, and ever-increasing competition."
A giant that continues to dominate despite everything
Despite its challenges, Shein maintains a significant position in the sector. According to the consultancy firm CIC, it is the third largest fashion company in the world with a 1,9% market share, behind only Nike (3%) and Inditex (2,5%). Its on-demand production model, known as LATR , allows it to launch batches of between 100 and 200 units and restock successful products in just five days, reducing the risk of overproduction and giving it unparalleled agility.
The company boasts 273 million active users and operates in 160 markets. Europe is its primary source of revenue, accounting for 32% of sales, followed by the US at 22%. Shein employs over 17.700 people, 80% of whom are based in China , and its catalog features more than two million items, with 4.700 new products added daily. The company has also begun diversifying into home decor, beauty, and accessories, and has made acquisitions such as the US-based Everlane to increase the average purchase value.
Litigation and legal risks
The IPO prospectus also reveals that Shein faces several legal and regulatory proceedings that, if resolved against it, could cost the company approximately €3.800 billion. These cases range from the sale of child-like sex dolls in France to lawsuits concerning consumer rights, environmental reporting, and data protection. The company also acknowledges its heavy reliance on influencers, whose behavior could negatively impact its reputation and ability to attract customers.
Another risk identified is the potential compensation for investors who participated in previous funding rounds. Funds such as General Atlantic, Tiger Capital, Boyu, and Tencent have committed $383 million to secure 22% of the offered shares, but Shein could have to pay them up to an additional $3.500 billion due to the valuation decline. This figure, almost double the amount raised, casts doubt on the immediate profitability of the offering for the company.
Future perspectives and challenges
Shein is going public with the intention of using the funds raised to improve its technology and expand globally. The company aims to transform itself into a service platform for other brands, similar to Amazon Web Services in the fashion industry, offering its supply chain and its network of 7.500 suppliers. The goal is to become the sector's leading supplier , although US authorities have temporarily blocked the acquisition of Everlane due to national security concerns.
Recent results haven't been encouraging: in the first quarter of 2026, Shein posted a loss of $99 million, compared to a profit of $395 million in the same period of the previous year. Sales grew by a mere 1,1% , reaching $9.052 billion, and net profit for 2025 fell by 40% to $2.064 billion. Despite this, the company remains confident that the online fashion market will continue to grow to $792.000 billion by 2030, when nearly 40% of sales will be conducted online.
Shein's IPO in Hong Kong marks a milestone in the company's history, but it also leaves many questions unanswered. The final valuation, 73% lower than in 2022, reflects market skepticism toward a business model facing tariffs, fierce competition, and increasingly stringent regulations. The company will need to demonstrate that it can sustain its growth and improve its margins in an environment far less favorable than the one created by the pandemic. With a fundraising total of just €1.500 billion and multimillion-euro payouts to its investors, Shein's stock market debut is more than just a starting point; it's a trial by fire for a giant that no longer seems invincible.
