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Shein faces scrutiny over Hong Kong IPO valuation as profits fall
Shein reported 2025 revenue growth of 8% to $41.8 billion, but net income dropped 39% to $2.06 billion, with a first-quarter loss tied to weaker core earnings and an accounting-related charge.
Investors are expected to closely examine whether Shein can justify the $40 billion to $50 billion valuation it is seeking for a Hong Kong initial public offering, after a prospectus filed on Sunday pointed to slowing growth and a sharp decline in profitability, according to Reuters.
The filing showed revenue rose 8% to $41.8 billion in 2025, while net income fell 39% to $2.06 billion. In the first quarter of 2026, the fast fashion retailer swung to a $99 million loss, Reuters reported, noting that the quarter included a $328 million fair-value charge on convertible redeemable preferred shares following an accounting change, alongside weaker core earnings.
Reuters also highlighted that the company’s operating margin, cited by a former China Investment Corporation executive, is an area institutional investors are likely to focus on. Shein said the removal of the U.S. de minimis exemption hurt sales growth by increasing costs and expenses, and it is considering options including raising prices in the United States to offset part of the impact.
Shein also pointed to challenges from a European fee on low-value imports, saying trends in Europe could match or exceed the impact seen in the U.S. Citi’s note, cited by Reuters, added that competitive intensity at the value end of the market could ease, which could benefit retailers such as Primark and H&M.
The prospectus further showed Shein’s valuation declined from $98.2 billion after a 2022 fundraising round to $64 billion after a 2024 funding round. Reuters reported that one analyst argued Shein is unlikely to achieve a substantial valuation uplift at its Hong Kong IPO or in secondary trading.