Shein’s Hong Kong IPO faces investor skepticism over slowing growth

Shein is preparing to launch its Hong Kong initial public offering as soon as August 19, but a sharply reduced valuation and questions about the fast-fashion retailer's growth trajectory are testing investor confidence in what was once one of the world's most highly valued private companies.

A Steep Markdown

The Singapore-based company is targeting a valuation of $30 billion to $40 billion, according to Reuters, a steep drop from the $98.2 billion it achieved in a 2022 fundraising round and the $64 billion in subsequent private rounds through April 2024. Morgan Stanley ↗ 1.20%, a sponsor on the deal alongside Goldman Sachs ↗ 0.27% and JPMorgan ↗ 0.87%, estimated a "fair value range" of $39 billion to $52 billion based on 18 to 24 times Shein's projected 2027 earnings, according to a report seen by Reuters.kfgo+1

Five investors who attended Shein's pre-deal presentations said they were unconvinced the company could recapture its former growth rates. "The future is quite challenging … Shein at its core is still a supply chain company," one investor told Reuters, citing fierce competition and pressure on Shein's direct-shipping model. A third investor argued that Shein deserved a single-digit price-to-earnings ratio, closer to that of PDD Holdings ↘ 1.62%, which owns rival platform Temu.kfgo

Growth Slowdown and Rising Costs

Shein's revenue grew 41.1% in 2023 and 20.7% in 2024, but research firm Coresight expects growth to slow to around 2% this year. The European Union imposed fees on e-commerce packages in July, following the United States' decision last year to end duty-free access for cheap parcels — removing a core advantage of Shein's cross-border shipping model.mezha+1

While annual active customers rose to 273 million in 2025 from 230 million a year earlier, purchase frequency held flat at roughly four orders per year. Marketing spending climbed to $1.43 billion in the first quarter, up from $1.09 billion a year earlier.kfgo+1

Vietnam Retreat Underscores China Dependence

Separately, Shein is drastically scaling back its Vietnam warehouse operations near Ho Chi Minh City, cutting jobs since April, after U.S. tariff changes and reliance on Chinese suppliers made the export hub unviable, Reuters reported. The retreat, roughly a year after Shein leased large logistics facilities there, highlights the enduring cost advantages of China's manufacturing base even as trade policy shifts.youtube+1

"They got app installs, they got users, but it wasn't sustainable," said Mike Ryan, head of e-commerce insights at Smarter Ecommerce.kfgo