Shein is expected to face intense scrutiny from investors as the fast fashion retailer pushes forward with a Hong Kong initial public offering targeting a valuation between $40 billion and $50 billion — a figure that may be difficult to defend given newly released financial data.
A prospectus filed on Sunday revealed that the company’s revenue grew just 8% to $41.8 billion in 2025, while net income dropped sharply by 39% to $2.06 billion. The filing also showed that Shein posted a $99 million loss in the first quarter of this year.
Part of that quarterly loss was tied to a $328 million charge related to convertible redeemable preferred shares following an accounting change. However, analysts note that slowing top-line growth and weaker core earnings point to deeper structural challenges facing the retailer.
Winston Ma, executive director of the Global Public Investment Funds Forum and a former managing director at the China Investment Corporation, said investors will focus on the company’s thin margins. “Institutional investors on the HKEX will … zero in on the 2.9% operating margin,” he said. “Investors will re-price Shein away from a pure hyper-growth tech platform toward a physical retail and logistics player navigating high-friction global trade.”
Among the company’s biggest headwinds is the elimination of the U.S. de minimis exemption, which had previously allowed low-value packages to enter the country duty-free. Shein acknowledged the change hurt sales growth and raised expenses, and said it was “pursuing a wide range of options including increasing prices in the U.S.” to help absorb those added costs.
The company also flagged risks in Europe, where a new fee on low-value imports is taking effect. Shein said trends in the European Union could be “generally in line with or exceed the impact observed” in the United States. One financial firm noted that Shein’s European struggles could actually benefit competing fashion retailers by reducing competitive pressure at the lower end of the market.
The IPO prospectus also highlighted how far Shein’s valuation has already fallen — from $98.2 billion following a 2022 fundraising round down to $64 billion after a 2024 funding round.
Shen Meng, director at Beijing-based boutique investment bank Chanson & Co., expressed doubt that the company will see a meaningful valuation boost from the offering. “I argue that Shein will unlikely achieve a substantial uplift in valuation either at its Hong Kong IPO or in the secondary market compared to its last private fundraising round,” he said.
E-commerce industry analyst Juozas Kaziukenas was equally cautious. “It would have been so much more optimistic if they went with their London or New York IPO a couple of years ago. The market by now has got a lot more difficult for them,” he said. He also pointed out that “there’s no proposed solution to the declining growth.”
With U.S. sales contracting since 2025 and European growth slowing due to tariff shifts, Kaziukenas noted that those two markets — which together make up more than half of Shein’s global revenue — are likely to remain flat in the near term. “Shein’s short-term future is going to happen in ‘Rest of the World’ countries, not Europe or the U.S.,” he said.
