Headquartered in Singapore, Shein is now one of the largest fashion companies in the world, known for its affordable but trendy clothing
- Shein’s IPO remains in doubt as the company seeks a new valuation.
- A US investigation and market volatility are worrying investors.
- 2024 now appears to be the earliest date for a public offering.
Shein, an e-commerce fast fashion company backed by Sequoia China and other wealth funds, was founded in 2008. But during the COVID-19 pandemic, the company emerged as a fashion giant. Headquartered in Singapore, Shein is now one of the largest fashion companies in the world, known for its affordable but trendy clothing.
The fast fashion trend has been around for some time and has been pioneered in the United States by companies like… H&M Group (HM-B.ST) and privately held Forever 21. But in recent years, shoppers have turned to online sales, making Shein the industry giant it is today.
Last year, Shein was valued at $100 billion in a funding round, making it one of the highest valued startup companies in the world. However, a volatile market and recent controversies have complicated the company’s plans to go public and reduced its value.
Shein IPO: The latest developments keep investors waiting
Shein is keeping investors on their toes as the company continues to pursue an initial public offering (IPO) in the United States. While a definitive timeline remains uncertain given a rapidly changing market landscape and recent IPO flops, the valuation of the IPO was last estimated to be priced at around $90 billion, according to a Bloomberg report citing people familiar with the matter.
According to recent rumors, Shein’s IPO plans remain a mystery to the public as deliberations are still ongoing. The biggest obstacle is a possible congressional investigation into its alleged practices of sourcing some of its materials from the Xinjiang region of China, where the Chinese government allegedly runs labor camps for Uyghurs, an ethnic group of Muslims.
When will Shein do an IPO?
Shein and its current investors are interested in an IPO, but if the allegations against the company prove correct, it would abandon those plans because it would violate U.S. laws regarding forced labor. This is likely to result in some IPO plans being put on hold.
A launch date in 2024 or later is the most likely scenario. The congressional investigation remains the biggest wild card. If the investigation finds that Shein did indeed violate laws banning products made using forced labor in China’s Xinjiang region, his goods would be banned from the United States.
It is also investigating a tax loophole that Shein and other retailers exploit to obtain tax exemptions on its imports into the U.S., known as the de minimis rule. This loophole allows goods under $800 to be exempt from tax and avoid higher oversight requirements from US Customs.
Thomas Westwater, a tasty live financial writer and analyst, has eight years of market and trading experience. @fxwestwater
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