(Correction: analyst's name is Brandon Ho, not Brendon)
HONG KONG, Sept 2 - Shares of Shein retreated more than 3% on Wednesday, marking a pullback on the second day of trading after an uneven initial public offering. The online fast-fashion retailer had plunged by as much as 10% during its first day of trading on Tuesday but staged a late rally to close near its HK$48.56 issuance price. In early Wednesday trade the stock was changing hands at HK$46.94.
The broader market also showed weakness, with Hong Kong’s Hang Seng Index down about 0.9% as Shein’s shares cooled from their rebound.
Market participants and analysts attribute the late recovery on the debut session to stabilisation measures often used around large listings to limit sharp price falls on the first day of trading. Those measures appeared to underpin the stock into the close on Tuesday but did not prevent a renewed decline the following morning.
Shein raised $1.7 billion through the IPO, which priced the company at $26.5 billion. That valuation is roughly one quarter of the company’s peak market worth of nearly $100 billion in 2022.
Investors and analysts point to a confluence of operational and external pressures that are constraining Shein’s growth prospects. Higher import duties in important markets, increasing regulatory risks and intensifying competition from rivals were cited as factors weighing on the company’s outlook and the economics of its business model.
"Shein’s weak performance reflects investors reassessing a growth story that has become harder to underwrite," said Brandon Ho, head of investment advisory for Singapore at Arta Finance. "Revenue growth has slowed over the past few years and margins are under pressure, while higher tariffs and customs costs in the U.S. and EU are weakening the economics of its low-cost cross-border model."
Those concerns underline investor scrutiny of both the near-term trading performance of the stock and the longer-term resilience of its cross-border, low-price proposition where tariffs and customs costs can materially affect unit economics. While stabilisation helped temper the initial sell-off, the subsequent slide highlights how quickly sentiment can shift when structural risks and slower revenue dynamics are brought into focus.
For now, Shein’s second day of trading illustrates the tug-of-war between short-term market mechanics and deeper questions about the company’s ability to sustain the growth trajectory that underpinned its earlier, much higher valuation.
Market context and immediate facts
- IPO proceeds: $1.7 billion.
- IPO valuation: $26.5 billion.
- Trading: fell as much as 10% on debut, closed near HK$48.56 issuance price, traded at HK$46.94 early Wednesday.
- Hang Seng Index: down about 0.9% during the session.