Shein, the Chinese fast fashion giant that’s both wildly popular and harshly criticized, has finally officially filed for an IPO in the U.S., according to the Wall Street Journal. It’s a big move from one of the biggest fashion companies in the world. Here’s what you need to know about Shein’s IPO.
By the numbers
Shein was most recently valued at $66 billion. That’s down from its $100 billion valuation in 2022, although the lowered valuation was an intentional move from Shein in January to better position itself ahead of its IPO.
Its revenue was last reported as $24 billion for the first nine months of this year. That’s a 40% increase year-over-year, a sign that its ultra-fast-fashion prices are resonating with a customer that’s increasingly conscious of price and affected by continued inflation. Shein’s prices are dirt cheap. Many items can be bought for under $10, and some for under $1. A pair of pants advertised on the homepage at the time of this article’s publishing is selling for $2.60.
Shein is reportedly seeking to go public with a higher valuation than the current $66 billion and, with $800 million in annual profits, it’s very likely that investors will see it as a safe bet.
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The leadup
Rumors of Shein’s potential IPO have been swirling for months. Over the summer, Reuters reported that Shein had filed for its IPO but later retracted the story.
But many outlets and analysts agreed that the IPO was going to happen this year. Some of the pieces of evidence included the aforementioned valuation cut, as well as some moves Shein made that were interpreted as trying to polish its image in the U.S. Appeasing both consumers and regulators who might otherwise oppose the company going public was considered the motive.
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For example, Shein moved its headquarters from China to Singapore in 2021 in a move that many saw as a way to distance itself from China to appease U.S. lawmakers. Those same lawmakers have been especially critical of Shein, both for its alleged use of forced labor and as part of a larger rivalry between the U.S. and Chinese governments.
But it’s not only lawmakers who are skeptical. Shein has made a number of PR gaffes that have alienated consumers, as well, including a misguided influencer brand trip back in June. The trip was ostensibly supposed to show off the clean conditions and good treatment experienced by Shein factory workers, but it was almost immediately blasted on social media for being an obvious bit of reputation laundering.
The future
The IPO market has been tough in the last year. Brands like Birkenstock, Lanvin and others outside of fashion, like Instacart, have all faced a tough market after going public. All of the mentioned companies saw their stock tank soon after going public as they faced a financial market in the U.S. where investors aren’t keen on taking big risks.
“Lack of investor appetite for IPOs has also contributed to a poor IPO market,” said David Kaufman, partner and co-chair of the corporate and securities practice at law firm Thompson Coburn. “There are many alternatives to IPOs now, like private placements, hedge funds and private credit markets, that were not available even a few years ago to investors.”
But if there’s any company that can break the trend of IPOs that struggle out of the gate, it could be Shein. Despite the scrutiny from the government and its reputation as the fastest of fast fashion, its audience in the U.S. has continued to grow. It had 15 million global users in 2020, 43 million in 2021 and 65 million in 2022.
