Shein Faces Investor Pressure to Lower Its Valuation to $30 Billion Ahead of London IPO

Company adjusts expectations amid market challenges and regulatory hurdles / Reuters

Online fast-fashion giant Shein is reportedly facing significant pressure from investors to revise its valuation down to $30 billion in preparation for its anticipated initial public offering (IPO) in London. This adjustment comes as a result of the shifting market conditions, increasing scrutiny, and regulatory challenges that Shein has been encountering.

Originally valued at $66 billion during its fundraising round in 2023, Shein had already planned to reduce its valuation to around $50 billion in light of market headwinds. However, it now appears that investors are urging the company to make a further cut to $30 billion as part of its IPO preparations in the UK. This adjustment is seen as crucial for ensuring that Shein's public listing goes smoothly and aligns with investor expectations, especially considering the challenges the company faces in an increasingly complex global market.

Founded by Chinese entrepreneur Sky Xu, Shein has built a massive presence in the global fashion industry by offering affordable and fast fashion. Despite its rapid growth and popularity, the company has faced ongoing challenges, including allegations related to labor practices, supply chain issues, and mounting political tensions. These factors have contributed to Shein’s decision to adjust its IPO strategy and its valuation.

In addition to these business hurdles, Shein's IPO plans have been complicated by shifting regulatory landscapes, particularly in the U.S. The recent move by the U.S. government to tighten rules on low-cost imports, including the so-called "de minimis" regulations, has raised concerns among Shein’s investors. The changes mean that Shein could face higher import duties on its goods, which would negatively impact its profit margins and overall business model. As a result, Shein has been forced to reconsider its IPO timeline and adjust its valuation accordingly to reflect these new realities.

The company’s plans to go public in London had initially been scheduled for the first half of 2025. However, the evolving regulatory landscape in both the U.S. and China has led to delays, with reports indicating that Shein is now looking at a potential IPO in the second half of 2025. This delay has further complicated the company’s path to the public market and fueled the growing pressure to lower its valuation.

Shein’s major investors, including IDG Capital, Tiger Global Management, and Mubadala Investment Co., have played a critical role in shaping the company's growth trajectory. Despite the challenges, Shein remains one of the largest e-commerce platforms in the world, and its IPO is expected to be a key moment in the company’s future. However, the ongoing uncertainties in global trade and changing consumer behaviors are prompting investors to reassess the company’s future market value, with the $30 billion target seen as a more realistic figure under the current conditions.

While Shein’s valuation adjustments signal a more cautious approach to its IPO, the company is still expected to be a major player in the global fashion market. However, the path to public listing is fraught with obstacles, and Shein will need to navigate both market volatility and regulatory hurdles to ensure a successful IPO.