Shein posts $99m Q1 loss, seeks $40-50bn Hong Kong IPO as tariff costs bite

Financials under the microscope

The draft prospectus, cleared by China's securities regulator on July 10, gave investors the most detailed look yet at Shein's accounts. Revenue rose 8% to $41.8 billion in 2025, a sharp deceleration from the 21% growth recorded in 2024 and 20.6% in 2023. Net income shrank 38.7% to $2.064 billion, pulling the operating margin down to 2.9%, according to Winston Ma, a former China Investment Corporation managing director.

The first quarter of 2026 brought a swing into the red. Sales edged up just 1.1% to $9.05 billion while the bottom line turned to a $99 million loss, against a $395 million profit in the same period a year earlier. The filing attributes part of the quarterly loss to a $328 million fair-value charge on convertible redeemable preferred shares, an accounting item rather than an operating shortfall, yet the underlying direction is unmistakable.

The de minimis domino

The core of Shein's business model, shipping ultra-low-value parcels directly from China, ran into a regulatory wall. In May 2025 the United States scrapped its de minimis exemption, which had allowed packages under $800 to enter duty-free. Goods sold on Shein's platform now face import tariffs of between 10% and 87.5%. The European Union followed on July 1, 2026, abolishing its €150 threshold and imposing a flat €3 fee per item.

Shein described the impact in plain terms. It has been "pursuing a wide range of options including increasing prices in the U.S." to offset some of the higher costs, according to the prospectus. The company warned that trends in the EU could be "generally in line with or exceed the impact observed" in the United States, signalling that the margin squeeze is far from over.

Valuation reset

The arithmetic of the public offering is shifting. In 2022 Shein was valued at $98.2 billion after a funding round; by 2024 that had fallen to $64 billion. The company is now seeking a Hong Kong IPO valuation of $40 billion to $50 billion, but investors have been pushing for around $30 billion, Bloomberg reported in February.

Investors will re-price Shein away from a pure hyper-growth tech platform toward a physical retail and logistics player navigating high-friction global trade.

Shen Meng, director at Beijing investment bank Chanson & Co, said Shein is unlikely to achieve a substantial uplift on its last private round. Catherine Lim of Bloomberg Intelligence warned that the lack of strong fundamental growth will "inevitably weigh on valuations." The prospectus itself did not disclose a price, share count or listing timetable; earlier reporting pointed to an August debut aiming to raise $2 billion to $3 billion.

Broader pressures

Other figures in the filing and supporting data underline the headwinds. Global web traffic growth slowed from over 60% year-on-year in the second half of 2025 to roughly 30% earlier this year and into single digits in June and July, according to Similarweb. Worldwide app downloads fell in most of the twelve months through mid-July, dropping as much as 30% year-on-year at their steepest point, per Apptopia. The Middle East war has also pushed up material costs, the company noted.

Meanwhile, the company continues a separate legal fight, pursuing rival Temu through London's High Court over what it calls industrial-scale copyright theft. Citi analysts said Shein's European struggles could lower competitive intensity at the value end of the market, potentially benefiting Primark and H&M.