Shein eyes $30B–$40B valuation for planned Hong Kong IPO this month

Shein, the Singapore-headquartered online fast-fashion retailer, is targeting a valuation of $30 billion to $40 billion for its upcoming initial public offering in Hong Kong, according to three sources familiar with the matter. The company is preparing to launch its IPO as soon as mid-August, with investor meetings having already taken place in New York, Boston, and San Francisco last week, sources said. While the specific range and launch timeline could still change depending on investor feedback, this would mark a dramatic reduction from Shein’s peak $98.2 billion valuation in private fundraising rounds in 2022, which subsequently fell to $64 billion by 2023 and April 2024 amid slowing growth and increased external pressures.

Shein’s planned valuation would put the company in a similar bracket to H&M, valued at around $26 billion, but significantly below competitors such as Japan’s Fast Retailing ($161 billion) and Inditex, the parent of Zara ($208 billion). Shein is reportedly prioritizing a valuation that will help support its share price after the listing, rather than maximizing valuation, according to one source. Some potential IPO cornerstone investors are pushing for a value at the lower end of the range, between $30 billion and $32 billion.

Founded in China in 2012 and now headquartered in Singapore, Shein has not yet publicly confirmed the size, offer price, or timing of its stock market debut. The company, best known for its aggressive pricing - offering items like $5 dresses and $10 jeans to shoppers across about 160 countries - recently disclosed in its draft IPO prospectus that it posted a $99 million quarterly loss. This loss was driven by slowing sales following the United States’ removal of an import duty exemption on small packages, as well as a $328 million fair-value charge related to an accounting change.

Market analysts point to two main factors behind Shein’s valuation reset: a decline in profits last year and new international e-commerce regulations that complicate its small-parcel-based business model. Kenny Ng, a securities strategist at Everbright Securities International, highlighted that shifts in US and European tariff rules for low-value shipments have made Shein’s future profitability less certain, though he believes there may be limited room for further valuation cuts.

Slowing revenue growth, reduced core earnings, and shrinking margins have also fueled concerns that Shein’s rapid expansion is facing headwinds from higher trade costs, tighter regulatory scrutiny, and heightened competition in global e-commerce. Reuters calculations suggest Shein would be trading at 0.7 to 1 times its projected 2025 sales, compared to H&M at about 1.1 times sales, Inditex at 4.6 times, and Fast Retailing at 7.6 times. Jianggan Li, founder and chief executive of consultancy Momentum Works, noted that these lower price-to-sales multiples reflect Shein’s thinner profit margins and weaker earnings visibility, making a lower-end valuation more attractive to investors.

Shein is also reportedly considering measures to offset potential losses for late-stage investors, such as offering early investor payouts or more shares with a lower conversion price. The company recently secured approval from the China Securities Regulatory Commission for its Hong Kong IPO on July 10, following failed attempts to list in New York and London. According to its draft prospectus, Shein plans to use IPO proceeds to fund technology investments, strengthen its global brand, support corporate responsibility initiatives, and for general corporate purposes. The company did not immediately respond to a request for comment.