Shein is considering reducing the effective cost basis for select late-stage investors ahead of its planned Hong Kong IPO, a move that essentially acknowledges what everyone on the cap table already knows: the company is worth a lot less than it used to be.
The Singapore-based fast-fashion retailer, which once commanded a valuation near $100 billion during a 2022 funding round, is now targeting an IPO valuation of roughly $40 billion. That’s a 60% haircut. For investors who wrote checks at the peak, this “cost reset” is less a generous gesture and more a survival mechanism to keep them from torpedoing the listing entirely.
The numbers tell a sobering story
Shein’s valuation trajectory reads like a chart crypto investors know all too well. The company hit approximately $98 to $100 billion in 2022, slid to $64 to $66 billion across 2024 funding rounds, and is now eyeing an IPO target between $40 and $50 billion. Some investors are reportedly pushing for as low as $30 billion.
The financial performance explains the markdown. Shein’s 2025 revenue came in at roughly $41.8 billion, which sounds impressive until you realize it represents just 8% year-over-year growth. For context, the prior year saw 20.7% growth on revenue of $37 billion. Deceleration at this scale tends to compress multiples quickly.
Then there’s the profitability question. After posting a $1.29 billion profit in 2024, Shein reported a $99 million net loss in Q1 2026. The culprit: US tariff changes on small parcels, which struck at the heart of Shein’s business model of shipping low-cost goods directly from Chinese factories to Western consumers.
The China Securities Regulatory Commission approved Shein’s Hong Kong listing in July 2026, with the company targeting a raise of $2 to $3 billion. The IPO could launch as soon as August or September 2026.
A long and winding road to going public
Shein’s IPO journey has been anything but straightforward. The company initially pursued a New York listing but abandoned that path amid intense regulatory scrutiny over its labor practices, supply chain transparency, and data handling. London emerged as Plan B, but Beijing reportedly objected to that approach as well. Hong Kong became the compromise, a venue that satisfies Chinese regulatory requirements while still providing access to international capital markets.
The cost reset mechanism itself is worth understanding. When late-stage investors buy into a private company at, say, a $66 billion valuation, and that company then IPOs at $40 billion, those investors are immediately underwater. A cost reset effectively reprices their shares downward, giving them a lower cost basis so the IPO price doesn’t represent an instant loss.
The risk for Shein is that even $40 billion proves too rich. Revenue growth has slowed dramatically, profitability has turned negative, and the regulatory environment for Chinese-linked companies accessing Western markets remains hostile. If the IPO prices at the lower end of investor expectations, near $30 billion, it would represent a roughly 70% decline from the 2022 peak.