Shein finally made its debut on the Hong Kong stock exchange, but shares fell 10% on the first day of trading, before recovering most of the losses. The operation valued the company at approximately 26 billion dollars, a figure far from the 100 billion dollars it was valued at in 2022, when it became one of the most valuable private startups in the world. The company managed to raise approximately 1.7 billion dollars in the initial public offering.
Founder Chris Xu saw his fortune fall from over 23 billion dollars to around 8 billion dollars, based on the 30% stake he maintains in the company. This reduction of over 15 billion dollars occurred over a period of just four years, at a time when Shein faces a combination of high tariffs, increased political and regulatory scrutiny, and growing competition.
The stock market debut comes at a particularly difficult time for Shein's business model. In the European Union, a new fee of 3 euros per low-value order has come into effect, while in the United States similar changes had already increased distribution costs. In the first quarter, logistics and distribution costs rose from 43% to 48% of revenues, while revenues grew only 1% year-on-year. Adjusted net margin came in at 2.5%.
The company is now trying to diversify its revenue sources, including e-commerce services for other brands, which grew 9% in the first quarter but represents only 14% of total revenues. After failed attempts to list in the United States and the United Kingdom, the choice of Hong Kong came in a context of rapprochement with Chinese authorities, with a commitment to invest approximately 1.5 billion dollars in China.
