Shein goes public: What went wrong with the fashion giant’s IPO

​Fashion brand Shein was supposed to become a favorite among investors. The company won over young shoppers with cheap, stylish clothing and turned itself into a global phenomenon. But by the time of its IPO, far less remained of its former success story than the market had expected.

How the market greeted Shein

Shein began trading on the Hong Kong Stock Exchange on September 1, and its debut immediately disappointed. The company’s shares fell 10% on the first day. In the IPO, Shein sold about 280 million shares and raised approximately $1.74 billion, valuing the company at around $26.5 billion.

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Back in 2022, Shein was valued at around $100 billion and was the world’s third-most valuable startup after ByteDance and SpaceX. In four years, its valuation fell by nearly three-quarters.

Shein was founded in China in 2012 and focused on selling inexpensive clothing online while quickly picking up new fashion trends. Its core audience became young women, primarily in the U.S. and Europe. The platform’s popularity surged during the pandemic, with sales more than tripling in 2020 alone.

The scale of the business remains enormous. In 2025, Shein generated $41.8 billion in revenue. That was nearly twice H&M’s $23 billion and only slightly below the $45.5 billion reported by Inditex, the owner of Zara.

A long road to the IPO

Shein began preparing for an IPO at the height of its popularity. In 2023, the company confidentially filed for a New York listing but faced opposition from U.S. lawmakers. Their concerns included Shein’s ties to China and labor conditions among its suppliers.

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The company then turned to London. That attempt also failed after Shein did not secure the necessary approval from Chinese authorities. Although the company had moved its headquarters to Singapore in 2021 and spent years emphasizing its international status, its manufacturing operations and supply chain remained closely tied to China. Nearly 80% of Shein’s employees are currently based in mainland China.

According to Bloomberg, Shein shifted its focus to Hong Kong in 2025. Founder Sky Xu became more active in dealing with Chinese authorities, and in February 2026 publicly pledged to invest $1.5 billion in expanding the company’s business in Guangdong province. Shein also opened a research center in Nanjing, where the company was founded in 2012. Chinese regulators approved the Hong Kong listing only in July 2026.

Investor preferences had changed by then. While investors had been willing to pay a premium for rapid e-commerce growth just a few years earlier, AI had become the main magnet for capital by 2026. As U Ethical Investors portfolio manager Sam Wyatt noted, Shein simply “missed the window”: e-commerce no longer attracts the level of investor interest it did several years ago.

When low prices become a problem

Shein approached its IPO with noticeably weaker financial momentum. In 2025, net profit fell from $3.37 billion to $2.06 billion. Revenue growth slowed from 21% to 8%. In the first quarter of 2026, Shein posted a $99 million loss, compared with a $395 million profit in the same period of 2025.

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One major blow came from the removal of customs exemptions that had helped Shein keep prices low for years. Until May 2025, packages worth less than $800 could be shipped from China to the U.S. without duties. The Trump administration then ended that exemption. In July 2026, the European Union abolished a similar regime and introduced a fee of around $3.5 on packages worth up to $175.

Additional pressure came from France. Starting September 1, the country introduced special charges on ultra-fast-fashion products, ranging from about $0.3 for socks or underwear to $14 for a coat. The charge cannot exceed half of the product’s price. This is particularly significant for Shein: as of the end of March, the platform offered more than 2 million products and added around 4,700 new clothing styles every day.

At the same time, competitors have been drawing more customers away. Within a year of launching in the U.S., Temu had overtaken Shein in website visits, app downloads and sales across major markets. TikTok Shop is competing for younger consumers by integrating shopping into entertainment content, while Amazon launched Amazon Haul in late 2024, offering clothing and other products for under $20.

How Shein is trying to regain ground

The IPO gave Shein about $1.7 billion in fresh capital. The company plans to spend roughly 40% of the proceeds on technology, including AI and supply-chain management tools. Another 40% will go toward marketing, brand awareness and global expansion. The remainder is earmarked for environmental initiatives and general corporate purposes.

Shein is also trying to expand beyond its traditional model of ultra-cheap fashion. The company already owns British fashion brand Missguided, and in 2026 it acquired U.S. retailer Everlane, known for more expensive clothing and its focus on sustainability.

Shein’s technology model is also evolving. The company can already turn data on browsing and purchases into new collections in around 10 days, compared with about three weeks for Zara and three to six months for traditional apparel manufacturers. Shein now wants to use AI to forecast demand, select products and manage suppliers even faster.

The IPO showed just how much Shein’s story has changed over the past four years. The company, once valued at nearly $100 billion, finally reached the public market at around $26.5 billion and saw its shares fall on the first day of trading. Shein remains one of the world’s largest clothing retailers, but the era when cheap parcels, explosive e-commerce growth and limited regulation allowed it to expand almost without restraint is over. It will now have to prove to investors that the business can succeed without the advantages that once turned Shein into a global phenomenon.