Shein Drops Over 5% on Second Day of Hong Kong Trading, IPO Valuation Down More Than 70% from Peak
nashnova research
Shein closed at HK$46 on its second trading day, down over 5% from its IPO price; the listing valued the company at roughly US$26.5 billion — about a quarter of its 2022 peak — as investors reprice the viability of its low-cost cross-border model.
What happened in the first two days?
On its debut (Sept 1), Shein fell as much as 10% intraday before clawing back to near its HK$48.56 IPO price by the close.
According to Reuters, citing sources and analysts, the late recovery was driven by a price-stabilisation mechanism — underwriters buying shares with reserved funds to support the price — not organic demand.
Day two (Sept 2) closed at HK$46, down over 5%, while the Hang Seng Index was essentially flat. This means → the stabilisation cushion is fading, and the market's true bid sits below the IPO price.
Why did the valuation shrink from US$100 billion to under US$30 billion?
The IPO raised US$1.7 billion at an implied market cap of roughly US$26.5 billion — about a quarter of its near-US$100 billion peak valuation in 2022.
In plain terms = in just over two years, Shein's perceived worth fell to less than a third of what private-market investors once paid.
The core shift: revenue growth has slowed and margins are under pressure, while rising tariffs and customs costs imposed by the US and EU are squeezing the profitability of its low-price cross-border model from both sides.
What structural pressures does the low-cost cross-border model face?
Brandon Ho, head of investment advisory at Arta Finance Singapore, said Shein's weak performance "reflects investors reassessing a growth story that is increasingly hard to endorse."
Investors and analysts point to three key variables: ① higher import tariffs in major markets ② rising regulatory risk ③ sustained competitive pressure.
This reflects a systemic weakening of the "low tariffs + fast turnover" economics that low-cost cross-border e-commerce relied on — not a one-off shock, but a shift in the model's underlying logic.
What is the market watching next?
Near term: how long the stabilisation mechanism holds — if the stock keeps falling once underwriter funds run out, true market pricing is well below the IPO price.
Medium term: whether Shein can rebuild its profitability logic under a new tariff regime — the key test for valuation stability.
In plain terms = investors are not watching short-term price swings; they want proof that "even with higher tariffs and tighter regulation, this business can still make money."
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