Shein is facing growing questions from investors over whether its proposed Hong Kong IPO valuation is justified, even after the fast-fashion retailer sharply reduced its target from a peak private-market valuation of almost $100 billion.
The company is now seeking a valuation of between $30 billion and $40 billion, with the offering potentially launching as early as August 19. However, five investors who attended company presentations or reviewed recent financial statements said they remained uncertain about Shein’s ability to return to the rapid growth that once supported its much higher valuation.
One investor described Shein’s outlook as increasingly difficult, pointing to slower sales growth, intense competition and pressure on the company’s supply-chain-focused business model. Shein management has highlighted the possibility of expanding its portfolio of in-house brands, but the investor questioned whether that strategy would create enough additional growth.
Another investor said Shein had become a more mature e-commerce company and that its IPO price would need to reflect slower future growth. A third investor argued that the company should trade at a single-digit price-to-earnings ratio, closer to PDD Holdings, the owner of shopping platform Temu.
Shein declined to comment.
Morgan Stanley analysts estimated a fair value range of $39 billion to $52 billion in a report provided to potential investors, according to Reuters. The estimate was based on 18 to 24 times Shein’s projected 2027 earnings and considered valuations of competitors including Inditex and H&M.
Shein’s growth slowdown is one of the biggest concerns for potential investors. Revenue increased 41.1 percent in 2023 and 20.7 percent in 2024, but research firm Coresight expects growth of only about 2 percent this year.
Changes to customs rules in major markets are adding pressure. The European Union introduced new fees for e-commerce packages in July, while the United States ended duty-free treatment for low-value parcels last year. These changes have weakened an important advantage of Shein’s direct-shipping model and increased the company’s need to develop local warehousing.
Customer engagement is another area under scrutiny. Shein reported that its annual active customer base rose to 273 million in 2025 from 230 million a year earlier. However, customers placed about four orders per year, unchanged from the previous year.
The company has also increased marketing expenditure. Spending reached $1.43 billion in the first quarter, up from $1.09 billion a year earlier.
Investors are therefore looking for evidence that higher marketing costs can generate stronger demand and customer engagement.
Shein has highlighted technology and data capabilities during investor presentations, but analysts say the company lacks the rapid growth narrative that has attracted significant capital to technology businesses.
The IPO will test whether investors are willing to value Shein as a high-growth retailer or as a more mature e-commerce company facing rising costs and tougher competition.
