Fast-fashion giant Shein saw its shares tumble 10% on the Hong Kong Stock Exchange on Tuesday following a lukewarm initial public offering.

The company sold approximately 280 million shares, raising about HK$13.60 billion ($1.74 billion). The final offer price was set at HK$48.56 per share, below the maximum offer price of HK$49.5.

Valuation Reset

The sharp decline has pushed the Singapore-based company’s valuation to nearly a quarter of its peak. The IPO now values Shein at around $26.5 billion, down sharply from its $100 billion private-market valuation in 2022.

Analyst Outlook

Shein’s Hong Kong IPO follows failed plans to list in New York and London. The company faced scrutiny over its supply chain after declining to assure British lawmakers that its products were free of Xinjiang cotton linked to alleged forced Uyghur labor. Founded by Chris Xu, Shein operates largely from China while selling overseas, shifting its headquarters to Singapore between 2021 and 2022.

Since reaching its peak valuation, the company has faced rising tariffs, tighter regulatory scrutiny, and stronger competition from Temu and Alibaba Group Holding’s (NYSE: BABA) AliExpress.

Shen Meng, director at Beijing-based investment bank Chanson & Co., told The Japan Times that rising costs linked to U.S.-China trade tensions and a less compelling growth story than Alibaba or PDD Holdings Inc. (NASDAQ: PDD) are likely to keep its valuation at a discount.

Brendan Ahern, CIO of KraneShares, expressed caution regarding Shein’s short-term prospects despite lauding the company as "very innovative" for the medium to long term. Ahern told CNBC’s "Squawk Box Asia" that he would not be counting on Shein pursuing a secondary listing on the Nasdaq or elsewhere in the U.S. in the near future.

Shein is targeting a valuation of $25 billion to $28 billion for its upcoming initial public offering in Hong Kong. According to sources cited by Reuters, this valuation range marks a significant departure from earlier market projections. Four years ago, the fast-fashion retailer was seen as potentially worth $100 billion, indicating a sharp contraction in perceived enterprise value over the intervening period.

The planned listing in Hong Kong positions Shein within Asia’s premier financial hub, aligning with broader trends of global tech and consumer firms seeking capital markets access outside traditional Western exchanges. The valuation gap between the current target and the historical high reflects evolving investor sentiment regarding growth sustainability and profitability in the competitive e-commerce sector.

What the Numbers Show

The divergence between the current $25 billion–$28 billion target and the $100 billion figure from four years ago highlights a material reset in market expectations. While the source does not provide underlying revenue or profit metrics to explain the compression, the magnitude of the reduction suggests that investors are applying stricter multiples to Shein’s business model compared to the peak optimism of the previous cycle. This adjustment may reflect broader macroeconomic headwinds or sector-specific pressures affecting high-growth consumer platforms.