Shares of online fast-fashion retailer Shein (0625.HK), opens new tab fell more than 5% on Wednesday, a day after a lacklustre debut session following a long-awaited initial public offering.p
The stock tumbled as much as 10% on Tuesday but recovered to close to its HK$48.56 issuance price.
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On Wednesday, the stock closed at HK$46 on its second day of trading in Hong Kong, while the city’s Hang Seng Index (.HSI), opens new tab closed flat.
Shein’s share price rallied late Tuesday and its rebound was the result of so-called stabilisation measures which can be applied to large listings to avoid sharp declines on a debut day, according to a source and analysts.
Shein raised $1.7 billion in its IPO which valued the firm at $26.5 billion, nearly a quarter of its peak of nearly $100 billion in 2022.
Higher import duties in key markets, growing regulatory risks and intensified competition from rivals are hampering Shein’s growth prospects, investors and analysts said.
“Shein’s weak performance reflects investors reassessing a growth story that has become harder to underwrite,” said Brandon Ho, head of investment advisory for Singapore at Arta Finance.
“Revenue growth has slowed over the past few years and margins are under pressure, while higher tariffs and customs costs in the U.S. and EU are weakening the economics of its low-cost cross-border model.
COURT3SY: Reuters
