Shein’s $98.2 Bn Valuation Has Lost Its Shine, What Went Wrong?

Online fast-fashion retailer Shein is heading towards its much-awaited Hong Kong IPO with a valuation target of $25–28 billion, according to three people with knowledge of the matter cited by Reuters. That is a dramatic reset from the $98.2 billion valuation the company reached in a 2022 fundraising round.

The latest target is also below the $30–40 billion valuation Shein was seeking earlier this month. The fall has come as investors question whether the company can return to the rapid growth rates that once made it one of the world's most valuable private companies.

So, what changed for Shein over the past four years, and why has its valuation fallen by roughly three-quarters?

How Did Shein’s Valuation Fall So Sharply?

Shein's valuation peaked at $98.2 billion in 2022, before being reset to $64 billion in 2023 and April 2024, according to the news agency. The latest IPO target represents another major reduction. Shein was seeking $40–50 billion in July before lowering its target to $30–40 billion and now potentially $25–28 billion.

The decline reflects a shift in investor expectations. Shein built its business around rapid growth, low prices and direct shipping to consumers across global markets. But that model is facing higher costs and a more difficult competitive environment.

Reuters reported that investors who attended Shein's IPO presentations or reviewed its financial statements were not convinced that the company could return to its earlier growth rates.

One investor told the news agency that “The future is quite challenging ... Shein at its core is still a supply chain company.” Another investor described Shein as an increasingly mature e-commerce business whose valuation would need to reflect a more modest growth outlook.

Is Shein Still Growing?

Shein remains a very large business, but its growth has slowed considerably. Its revenue increased 41.1% in 2023 and 20.7% in 2024, according to Reuters. Research firm Coresight expects growth to slow to around 2% in 2026 as changes to customs regimes in key markets increase costs and weigh on demand.

The company's latest financial filings also show the slowdown. Shein's revenue rose 8% to $41.85 billion in 2025, compared with 20.7% growth in 2024. At the same time, net income fell 38.7% to $2.06 billion.

In the first quarter of 2026, revenue growth was even weaker. Shein's revenue grew 1.1% to $9.1 billion, while its operating margin fell to 2.9% from 3.9% a year earlier, according to its draft prospectus.

The company also swung to a $99 million net loss, compared with a $395 million profit a year earlier. However, the loss partly reflected a $328 million fair-value charge related to convertible redeemable preferred shares, meaning the headline loss does not entirely represent underlying operating performance.

What Happened To Shein’s Low-Price Advantage?

Shein's business model depends heavily on selling inexpensive products directly to consumers. Changes in trade rules are making that model more expensive.

In the US, the removal of the de minimis exemption has affected Shein's sales. The exemption had allowed packages worth less than $800 to enter the country without duties. Shein said the change had an adverse impact on US sales and overall growth.

The effect can already be seen in its numbers. Shein's US revenue fell 14.3% to $2.04 billion in the first quarter of 2026, according to Reuters.

Europe is another challenge. The European Union introduced a €3 fee on low-value e-commerce imports from July, affecting the economics of direct shipments from China. Europe accounted for about one-third of Shein's revenue in 2025.

The company has responded by expanding warehouse capacity and shipping products to Europe in bulk, but higher costs could make its products less attractive to highly price-sensitive shoppers.

Is Competition Also Hurting Shein?

Shein is no longer operating in an environment where rapid e-commerce growth alone can support a premium valuation.

Competition has intensified across global e-commerce, including from Temu and other platforms. Investors are also questioning whether Shein can deepen engagement among its existing customers.

Its annual active customers increased from 230 million in 2024 to 273 million in 2025, but purchase frequency remained at roughly four orders a year, according to the news agency.

At the same time, Shein increased marketing spending to $1.43 billion in the first quarter of 2026, from $1.09 billion a year earlier. That means the company needs to show that higher spending can translate into stronger demand.

What Does The $25–28 Billion IPO Valuation Mean?

Shein's latest valuation target does not mean the company has ceased to be a major global retailer. It generated $41.85 billion in revenue in 2025 and continues to have hundreds of millions of active customers.

What has changed is the price investors are willing to pay for that business. The market is now looking at slower growth, weaker margins, higher trade costs and tougher competition rather than the rapid expansion that supported Shein's $98.2 billion valuation in 2022.

The Hong Kong IPO will therefore be more than just Shein's long-awaited public debut. It will also put a public-market value on how investors view the future of its low-price, global fast-fashion model.