QUOTES-Shein shares slide in Hong Kong debut on concerns about growth and regulatory risks

Shares in online fast-fashion retailer Shein 0625.HK dropped 4% in their first day of Hong Kong trade on Tuesday, as investors worried about the impact ​of setbacks that long delayed its listing and have undermined its competitive advantages.

Known globally for selling $5 tops and $10 dresses, Shein has been ​humbled by tariff and duty changes in the U.S. and Europe that have contributed ‌to ​a dramatic decline in valuation for the company. Here are comments from analysts on the debut:

LORRAINE TAN, DIRECTOR OF EQUITY RESEARCH FOR ASIA AT MORNINGSTAR, SINGAPORE: "Essentially, the weak-to-flat opening should not be too surprising given the soft signals in the run up to the IPO. Firstly, the sharp drop in valuation from pre-market valuation three years ago reflects growth concerns.

"Secondly, investors may want to see what ‌the impact on European sales may be with the tax in the euro zone on parcels below €150 being introduced in July. US and European revenue make up close to 60% of revenue. "Taxes and competition have diminished prospects. And thirdly, the market will need confidence in the company's strategy to grow its business. There’s possibly not enough clarity on the latter at this point.

"Also, I would point out that Hong Kong listings tend not to be as exuberant as mainland listings because the former tend to be priced closer to fair valuations while the ‌latter are priced at a discount." GARY TAN, PORTFOLIO MANAGER, ALLSPRING GLOBAL INVESTMENTS, SINGAPORE:

"The lacklustre debut of Shein was broadly in line with our expectations, as the IPO roadshow was characterised more by investor questions than enthusiasm. We do not see this as the market ‌indiscriminately punishing non-AI IPOs; rather, it is a Shein-specific story." "Our sense is even after the IPO roadshow, investors continue to question whether its current business model reset can sustainably reaccelerate growth. Ultimately, Shein needs to prove it can regain the fashion 'X-factor' that once differentiated the brand and drove exceptional growth."

DICKIE WONG, EXECUTIVE DIRECTOR OF RESEARCH AT USMART SECURITIES, HONG KONG: "I've been cautious on Shein for some time and previously advised investors not to subscribe. Even though the valuation has come down a lot from the 2022 peak, revenue growth has already slowed to almost nothing.

"A large part of the money raised is effectively going to compensate earlier high-entry D-round shareholders, rather ⁠than purely funding ​new growth. Six-month cornerstone lock-ups help only at the margin. "Today's drop through ⁠the IPO price looks reasonable to me."

JAMES OOI, MARKET STRATEGIST, TIGER BROKERS, SINGAPORE: "One of the clearest questions is whether growth is becoming more expensive to sustain. With marketing expenses rising faster than revenue in 2025, the focus is increasingly on whether Shein can keep expanding its user base without customer acquisition becoming more costly.

"A ⁠more constructive part of the story is Shein's gradual shift from a pure retailer to a retailer-plus-platform. Service revenue has become a larger share of the mix as third-party brands sell through Shein. "Strategically, the shift could broaden Shein's assortment and let it monetise its infrastructure beyond its own inventory, though investors ​will also have to weigh the added compliance and reputational risks of hosting third-party merchants.

"Shein is also becoming less dependent on apparel, with categories such as home and living playing a larger role. The bigger question is whether the ⁠company can extend its supply chain and customer acquisition capabilities into a broader lifestyle commerce platform, which could potentially lead to a material expansion of its addressable market." JOSH GILBERT, LEAD ANALYST FOR ASIA-PACIFIC, ETORO, SYDNEY:

"Shein has spent a decade proving how many people will buy a $5 dress, but on day one in Hong Kong, it ⁠learned ​that shoppers and shareholders are buying two very different things. Shares fell as much as 10% despite only 6.6% of the company being floated, in a market that has delivered a string of successful debuts this year. Scarcity like that is supposed to flatter a listing, so falling anyway is a tell-tale sign. "Listing around 70% below the 2022 peak looks like a bargain only if the old price was sensible, and that number was set at the height of the pandemic e-commerce boom. Revenue growth has since slowed from ⁠21% to 8%, and first-quarter sales barely moved.

"A heavily discounted valuation is not the same thing as a cheap stock, and the market said as much by pricing Shein below H&M, the incumbent it was meant to be replacing. "The debut clearly hasn't ⁠been a roaring success, and keeping customers is the next challenge, because ⁠the thing customers love most is the thing getting hardest to protect.

"Daily active users in Europe have fallen around 45% since the EU scrapped its duty exemption on small parcels, and Temu has seen a similar drop. This is less a Shein problem, but more so the end of an era for cheap cross-border shipping. The brand's reach is unquestionable, but a large share of ‌that loyalty has always belonged to the price ‌tag."