Shein reduced its valuation by half before its planned initial public offering later this month, targeting a market cap between $40 billion and $50 billion. The figure represents a sharp decline from its $100 billion peak in 2022, according to documents filed with the Hong Kong stock exchange.
Cash guarantees and downside protections for early backers
The ultra-fast-fashion retailer is offering investors in its pre-IPO rounds an 8% annual return on their original stakes, totaling about $1.1 billion. Payments will be made in three equal installments by the end of September, calculated from the date of their initial investment through March 4, 2026.
If the IPO prices below what early investors paid, they will receive additional shares to make up the difference. Preferred shares will convert to Class B common stock at a lower price, giving backers more equity to offset the valuation drop.
Related: ETF myths debunked by experts
The company reported a $99 million net loss for the most recent quarter, showing slower revenue growth and profitability. Until now, Shein had shared only broad sales and earnings figures, avoiding detailed operational disclosures.
Valuation slide reflects broader market caution
The valuation has fallen steadily since its 2022 funding round, when it reached $98.2 billion. By 2023, the number had dropped to $64 billion. The company considered listings in New York and London before choosing Hong Kong, where it plans to debut by the end of August.
Key shareholders include IDG Capital, Mubadala Investment, Tiger Global Management, and HSG. The IPO filing is the first time Shein has released full financial statements in years, a requirement for its delayed public debut.
Related: Oil surge drives up borrowing costs
Though Shein remains a leader in online apparel, its growth has slowed, and the lower valuation reflects that change.
The protections in the offering show the company wants to keep early backers satisfied. Cash payouts and conversion adjustments are rare for a company of its size, indicating an effort to maintain trust ahead of the listing.
Details about the number of shares or expected price range were not included in the documents.
Leave a Reply