Grey market plunge and debut losses

Shein Global Holdings' shares fell sharply in grey market trading on Monday evening, closing 13.1% lower at HK$42.2 after dropping as much as 28%, according to data from Futu Holdings. With a board lot size of 100 shares, each lot yielded a loss of HK$636, excluding transaction fees.

The decline continued into the company's Hong Kong debut, where shares fell as much as 10% to a low of HK$43.72 in early trading, compared with the IPO price of HK$48.56, before recovering some of the losses. Heavy selling marked early trading, with bids hit three times as often as offers were lifted.

IPO details and valuation

Shein raised HK$13.6 billion (US$1.7 billion) after pricing shares for its Hong Kong listing at just above the midpoint of its set range. The fast-fashion retailer sold 280 million shares at HK$48.56 each, according to an exchange filing, valuing the company at slightly over US$26 billion.

This valuation makes Shein one of the world's largest listed apparel and fashion companies, though still below Swedish retailer Hennes & Mauritz, which is valued at about $30 billion.

The grey market drop reflects a valuation significantly below Shein's peak valuation of nearly US$100 billion in 2022 and its Series D+ funding valuation of around US$64 billion in 2023. To compensate investors who took part in those private funding rounds, the prospectus reveals that Shein will pay around US$1.33 billion to holders of its pre-D, D and D+ preference shares.