Shein makes lacklustre Hong Kong debut as investors fret about growth and regulatory risks — SkimNews
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- Shein shares ended flat at HK$48.50 in their Hong Kong debut after falling as much as 10% in early trade, with the rebound aided by Goldman Sachs-led stabilization measures; the close values the company at ~US$26.3 billion versus its 2022 peak of nearly US$100 billion.
- Shein's net income slid 39% last year and it swung to a loss in Q1, with first-half operating profit margin expected to come in slightly lower than Q1 amid higher customs duties, tariffs and logistics costs.
- The U.S. ended its de minimis duty exemption for e-commerce shipments under US$800 last year, and the EU followed with fees on low-value packages; daily active users in Europe have fallen ~45% since, per eToro's Josh Gilbert, who called it 'the end of an era for cheap cross-border shipping.'
- IPO demand was tepid: the retail tranche was subscribed 5.63 times and the international portion 2.59 times, compared to high-profile AI and robotics deals that drew hundreds of times oversubscription in Hong Kong.
- Shein has agreed to make ~US$3.5 billion in cash payments and share adjustments to preferred shareholders who invested at higher valuations — a payout Momentum Works CEO Jianggan Li said makes this listing 'probably more of a capital-structure event' than a fundraising one.
- Regulatory risks remain a live overhang: the U.S. Federal Trade Commission has an ongoing consumer protection investigation that could result in significant penalties, while the European Commission is examining illegal products, potentially addictive design, and recommendation system transparency.
- Shein is widening beyond its $5-tops model: it acquired U.S. apparel brand Everlane in May and has expanded its third-party marketplace, though Saxo's Charu Chanana noted investors were being asked to pay a premium — 15x forward earnings, more than double PDD/Temu's multiple — despite weaker growth visibility.
Why it matters: At 15x forward earnings versus PDD's roughly half that multiple, Shein commands a premium despite weakening fundamentals — net income down 39% last year and European daily active users dropping ~45% after the EU scrapped its duty exemption. The US$3.5 billion compensation to preferred shareholders who invested at peak valuations shows this was primarily a capital-structure fix, not a growth story, per Momentum Works' Li.
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