Shein: Discounted valuation would give IPO a ‘better chance of going ahead’
Fast-fashion giant Shein is under investor pressure to slash its valuation by two thirds from its all time high should it go ahead with its long-awaited float on the London Stock Exchange later this year, according to a report.
Shen was valued at $66bn (£52bn) in a funding round in 2023 and as high as $100bn in 2022, but a Bloomberg News report on Monday suggested it is being pushed by its backers to cut its valuation to $30bn.
Lowering to the “cavernous gap” between Shein’s past and prospective valuation on the stock market gives the IPO a better chance of going ahead, according to two major investment platforms.
“It makes sense that investors want a discounted valuation for Shein before agreeing to back the IPO”, AJ Bell investment director Russ Mould said.
“Slashing the valuation gives the IPO a better chance of going ahead… There are so many risks involved with the investment case that investors will want a cut-price deal as compensation,” Mould added.
Roadblocks to Shein’s entry on the London Stock Exchange include questions over its alleged use of forced labour in its supply chains, supposed intellectual property infringements and concerns about governance and transparency.
The latest concern has been the threat to its business model posed by US President Donald Trump.
“[Shein] is highly reliant on keeping prices low and this has been helped by the firm not having to pay import duties on millions of low-value packages,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said.
“If Shein can’t compete so easily on price in major markets like the US and the EU, it’ll be a much harder sell [to investors], particularly given it also faces claims of environmental recklessness and poor working conditions in its supply chains,” Streeter added.
However, both Streeter and Mould said they still expected the IPO to go ahead, albeit at a lower price.
“The fact Shein is still battling it out suggests it remains confident of getting enough investor support to list its shares,” Mould said.
Shein declined to comment.