Shein wants $1.77 billion for its Hong Kong IPO. The company was valued at $100 billion in 2022. Now it's targeting a $27 billion valuation. That's a 73% haircut in four years.
Someone built a spreadsheet. Someone ran the numbers. Someone presented this to the board. Everyone nodded. Not one person said maybe we should wait until the narrative improves. They just went ahead and filed for an IPO at a fraction of what venture capital morons said the company was worth when money was free.
The filing happened Monday. Retail traders will see "fast fashion" and "IPO" and "Hong Kong" and think they've discovered the next Alibaba. They haven't. They've discovered a company that sells $4 crop tops with a business model predicated on algorithmic demand forecasting and supply chains that would make a UN inspector weep.
This is what happens when you let private market valuations run wild. You get a $100 billion price tag based on vibes and TAM slides and some guy named Brad explaining why gross merchandise value is the only metric that matters. Then the IPO window opens and suddenly everyone remembers that companies need to turn revenue into profit.
Shein's pitch is simple. Give us $1.77 billion and we'll give you shares in a company that was worth way more before interest rates existed. That's the trade. Take it or leave it.
The real victims here are the late-stage investors who bought at the top. They believed the hype. They wrote the checks. Now they're stuck holding shares in a company going public at a 73% discount while trying to explain to their LPs why that's actually good news.
Retail will pile in anyway. They always do. They'll see the IPO price and think it's a bargain because it's lower than the private valuation. They'll ignore the part where private valuations are fantasy numbers written by people who get paid to be optimistic. They'll buy shares and then wonder why the stock trades sideways for two years.
At least the crop tops are cheap.
Photo by on Unsplash
Leave a Comment