Shein has applied to go public in the United States. If it succeeds, this could make Shein one of the biggest initial public offerings (IPOs) in recent years. But that’s all we know for now. Or is it? The U.S. Securities and Exchange Commission allows companies to file confidentially. However, if the IPO progresses, the […]
The post Shein’s IPO: Unpacking Everything You Need to Know first appeared on PYMNTS.com.
Shein has applied to go public in the United States. If it succeeds, this could make Shein one of the biggest initial public offerings (IPOs) in recent years. But that’s all we know for now. Or is it?
The U.S. Securities and Exchange Commission allows companies to file confidentially. However, if the IPO progresses, the submission — containing information about the company’s finances, executives, and other important details — will eventually become a public document. This would give various stakeholders, including potential investors and customers, a look into a company that has mostly kept its operations under wraps.
That said, despite its secretive approach, Shein has faced significant controversy in the U.S., involving legal battles over alleged copyright infringements and inquiries from lawmakers about the fast-fashion company’s potential use of forced labor in China.
Until those files become public, here’s everything we know thus far about Shein and its IPO:
In the world of online fashion, Shein (pronounced “she-in”), which inaugurated its initial fashion venture in China in 2012 with four co-founders but later in 2022 moved its headquarters to Singapore, has mastered the art of retail therapy, becoming a heavyweight in the online-only arena.
Its strategy involves offering clothing and various items at remarkably affordable prices, all while staying attuned to the latest fashion trends. By 2022, the company proudly declared itself the “most searched fashion brand in the world.”
Furthermore, Shein has strategically harnessed the power of vigorous marketing, targeting youthful shoppers on platforms such as TikTok, Instagram and various other social media channels.
Shein has changed the clothing industry by responding to the latest trends such as “quiet luxury” and making them attainable by providing skirts for $5 and jeans for $9, therefore responding to changing consumer preferences with a broad range of affordable apparel.
Read more: Why Shein Thinks Quiet Luxury Will Drive More Sales
This approach had a notable impact — in 2022, the company achieved $23 billion in revenue and $800 million in net profit. Furthermore, Shein has continued its success, reporting record revenue and income in the first three quarters of 2023.
With a presence in over 150 countries, the largest market for Shein is the U.S. Beyond its online platform, Shein has expanded into new territories, transforming into a marketplace for third-party sellers. This expansion puts Shein in direct competition with established eCommerce platforms like Amazon and Temu.
Chris Xu, one of the co-founders, is still in charge of the company and owns a big share of it, per Bloomberg News. However, details about him are not widely known.
We know that he was born in China in 1983 and supposedly studied international trade at Qingdao University. After college, he worked at an online marketing company.
Chris Xu is also known as Xu Yangtian and was called “a mysterious tech genius” in a lawsuit. His reported net worth is $21 billion, thanks to his 33% ownership in the business.
The other three Shein co-founders — Miao Miao, Gu Xiaoqing, and Ren Xiaoqing — have also hit billionaire status due to Shein’s growing popularity. According to Bloomberg, Miao, Gu, and Ren each own around 8% of the business, valuing them at approximately $5 billion each.
The initial public offering (IPO) is expected to take place at some point in 2024.
The projected stock price for Shein will remain uncertain until the IPO approaches, at which point its underwriters, including Goldman Sachs, JPMorgan Chase, and Morgan Stanley, will determine the stock price. This determination will be influenced by factors such as investor demand and the company’s financial performance, including profitability and growth prospects.
Earlier this year, Shein, valued at $66 billion, swiftly rose to become one of the world’s biggest fashion brands, along with H&M, ASOS and Uniqlo. Shein is expected to target an even higher valuation as it gears up for its IPO.
In a potential U.S. stock sale, Shein’s valuation might hit $90 billion, putting it roughly three times ahead of the retail giant H&M, which has a market capitalization of about $27 billion.
Potential political concerns may arise during the IPO process, considering that certain lawmakers have urged the SEC to audit Shein before permitting its public stock offering. However, as part of its filing requirements, Shein will be obligated to address its supply chain and operational aspects, leading to increased scrutiny of the company’s ethical aspects.
Earlier this year, the U.S.-China Economic Security and Review Commission raised concerns about “controversial” business practices by Shein and its competitor, Temu. In the report, the commission portrayed their expansion as a case study of Chinese eCommerce platforms skillfully navigating regulations to establish a dominant presence in the U.S. market.
Upon the public release of the registration filing, investors can delve into various aspects of the company’s operations, encompassing sales growth, profitability and management structure, among other subjects.
The profitability of Shein is of particular interest to investors, especially in the challenging landscape of online fashion, where generating profits can be intricate.
Once the filing has been made public, PYMNTS will report key takeaways.
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The post Shein’s IPO: Unpacking Everything You Need to Know first appeared on PYMNTS.com.
