Shein's slowing growth tests investor appetite ahead of Hong Kong IPO
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Shein faces questions over whether its slowing growth, rising costs and changing market conditions justify a $30 billion to $40 billion IPO price tag after cutting its expected valuation from a near $100 billion private market peak. Five investors who attended presentations ahead of a Hong Kong offering expected as early as August 19 say they doubt the retailer can return to 2022's growth rates. Morgan Stanley analysts estimate a fair value range of $39 billion to $52 billion.
Investor Skepticism
Five investors who reviewed financial statements ahead of the Hong Kong listing said they are not convinced Shein can return to the growth rates of its $100 billion 2022 round. One described the company as still a supply chain business at its core, pointing to slowing sales growth from competition and pressure on its business model. Another called Shein a maturing e-commerce business whose IPO valuation must reflect a more modest outlook. A third said it should be valued at a single-digit price-to-earnings ratio, closer to PDD Holdings.
Valuation Pressure
Shein cut its expected IPO valuation to $30 billion to $40 billion, down from a near $100 billion private market peak. Morgan Stanley analysts, one of the IPO sponsors alongside Goldman Sachs and JPMorgan, estimated a fair value range of $39 billion to $52 billion. That range is based on 18 to 24 times Shein's projected 2027 earnings, compared with the multiples at Inditex and H&M. Under terms in Shein's IPO filing, founders would have to provide extra shares to certain pre-IPO investors if the valuation falls below agreed thresholds.
Growth Slowdown
Shein's revenue rose 41.1% in 2023 and 20.7% in 2024, but Coresight expects growth to slow to around 2% this year. Customs changes in key markets are raising costs and weighing on demand. The European Union imposed hefty fees on e-commerce packages in July, adding to cost pressures in key markets. Management highlighted plans to expand Shein's portfolio of in-house brands, though investors questioned whether that is a meaningful new growth avenue.
What's Next
Shein is expected to launch the Hong Kong offering as early as August 19, with final pricing likely to reflect investor feedback on the lower valuation. It remains unclear whether the reduced range will be enough to secure the targeted $30 billion to $40 billion valuation, or whether further concessions to pre-IPO investors will be triggered.
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Shein's slowing growth tests investor appetite ahead of Hong Kong IPO
