Key facts
- Shein is targeting a valuation of $40 billion to $50 billion for its upcoming Hong Kong IPO.
- New EU fees of €3 on low-value e-commerce imports are expected to affect Shein's sales and profits.
- Europe accounts for one-third of Shein's revenue.
- Shein reported $37 billion in revenue and $1.29 billion in profit in 2024.
- The company has reduced advertising spending in Europe due to the fees.
Shein's planned Hong Kong IPO is facing potential headwinds as new European Union fees on low-value e-commerce imports are expected to impact its sales growth and profitability. The fast-fashion giant is seeking a valuation between $40 billion and $50 billion, a significant decrease from its $100 billion valuation in a 2022 funding round.
Last year, Shein generated over $40 billion in global revenue and nearly $2 billion in net profit, with its 2024 results showing $37 billion in revenue and $1.29 billion in profit. However, the EU's recent imposition of a €3 fee on parcels valued under €150, aimed at curbing unfair competition from China, could dent its growth this year. Europe constitutes a third of Shein's revenue.
Analysts suggest that a valuation of $40 billion might still be considered expensive, with $30 billion appearing more attractive, especially given the intense e-commerce competition and the impact of the European fees. Shein has been preparing for these changes by expanding warehouse capacity in Poland and shipping products in bulk to the EU. However, like rival Temu, it has reportedly slashed advertising spending in Europe as it assesses consumer reaction to higher prices.
This situation contrasts with previous years when both platforms increased marketing in Europe to offset weaker U.S. growth. While Shein could pass on higher costs to consumers in the U.S., this is more challenging in price-sensitive Europe. The investor concerns surrounding Shein's IPO valuation highlight the increased political scrutiny and regulatory challenges faced by Chinese e-commerce companies like Shein and Temu, which have been perceived as undercutting local retail sectors in Western markets.