Key facts
- Shein shares fell on their Hong Kong market debut.
- The company priced its IPO at HK$48.56 per share, valuing it at over $26bn.
- The IPO raised HK$13.6bn, but the stock closed down 4% on its first day.
- Shein shares slipped more than 3% on Wednesday, the second day of trading.
- Concerns over forced labor and supply chain transparency repeatedly delayed Shein's listing attempts.
- Regulatory changes in the US and EU regarding 'de minimis' import duty exemptions threaten Shein's business model.
Shein's shares slipped more than 3% on Wednesday, a day after a lacklustre debut session following its long-awaited initial public offering on the Hong Kong stock exchange. The online fast-fashion retailer's stock had tanked by as much as 10% on Tuesday but recovered to close near its HK$48.56 issuance price. The stock was trading at HK$46.94 in early trade Wednesday, while Hong Kong's Hang Seng Index was down about 0.9%.
Shein's share price rallied late Tuesday, a rebound attributed to so-called stabilisation measures applied to large listings to avoid sharp declines on debut day, according to a source and analysts. The company raised $1.7 billion in its IPO, valuing the firm at $26.5 billion, a significant decrease from its peak valuation of nearly $100 billion in 2022.
Investors and analysts cited higher import duties in key markets, growing regulatory risks, and intensified competition from rivals as factors hampering Shein's growth prospects. Brandon Ho, head of investment advisory for Singapore at Arta Finance, noted that Shein's weak performance reflects investors reassessing a growth story that has become harder to underwrite. He added that revenue growth has slowed and margins are under pressure, while higher tariffs and customs costs in the U.S. and EU are weakening the economics of its low-cost cross-border model.