Shein is pitching its long-awaited Hong Kong IPO to investors at a valuation below $30B, a roughly 70% drop from the peak it hit in 2022.
Bloomberg Intelligence pegs the fair value even lower, at $22B to $25B, based on 13 to 15 times projected 2027 earnings. Analysts Catherine Lim and Jason Zhu expect earnings to recover to $1.67B in 2027, then grow roughly 20% annually through 2029.
The collapse in valuation reflects a business model under serious stress. Shein built its empire on ultra-cheap clothing shipped directly from Chinese factories.
Two structural pillars made that possible: the US de minimis exemption, which let packages under $800 enter duty-free, and a comparable EU rule for packages under 150 euros. Both are now gone.
US sales are already falling
In IPO documents filed with Hong Kong's exchange, Shein disclosed that US revenue fell more than 3% from 2024 to 2025. In the most recent quarter, it plunged 14% year-over-year.
The company started passing most of the new tariff costs onto consumers in May 2025, pushing prices up and shoppers away.
Tariff rates on Shein's Chinese goods now run from 10% to 87.5%, up from a prior range of 0% to 62.5%. Companywide profit fell 39% between 2024 and 2025. In Q1 2026, Shein swung to a $99M loss from $395M in profit a year earlier.
Europe, which accounted for 35% of Shein's 2025 revenue, is next. The EU recently replaced its duty-free threshold with a flat 3-euro levy per product category per shipment. European sales growth had already slowed from 33% in 2024 to 9% in 2025, then to just 2% in Q1.
Shein warned in its filing that EU trends could match or exceed the damage seen in the US.
The pivot that might save it
To offset the pressure, Shein is leaning into higher-margin services. Its brand enablement segment lets designers and other brands plug into Shein's supply chain and distribution infrastructure.
That unit's revenue grew roughly 40% in 2025, and its operating margin runs at about twice the company's overall margin.
The catch: brand enablement is still only roughly 1% of total revenue. The core retail business remains the engine, and that engine is sputtering.
"Pricing is usually not a great competitive advantage. If that is your only competitive advantage, it's incredibly hard to maintain."
Angela Lee, Columbia Business School
If the Hong Kong IPO prices at or below $30B, Shein may need to consult existing investors before proceeding.
