Fierce competition and tariffs have left Shein's growth story in tatters, but the fast-fashion giant still has moves to make. While the company's shares aren't a bargain, they aren't castoffs either. The Singapore-based giant, which was founded in China and still makes the majority of its clothes there, will be targeting a roughly $27 billion valuation in its Hong Kong initial public offering on Tuesday, a long way off from the nearly $100 billion it once commanded.

The bear case for Shein is fairly straightforward. Its primary appeal to customers was fast fashion at dirt-cheap prices. But the U.S. last year took away a trade loophole that allowed companies like Shein to import low-value parcels duty free.

In its filing, Shein has said that it has been passing on the majority of those costs to customers. This year, Europe started imposing duties on cheap parcels, too. Meanwhile, competition lurks in every corner.

In the U.S., Temu and Tik Tok Shop are fighting for shoppers' scroll time. Meanwhile, JD.com, Temu-owner PDD and Singapore's Shopee are all vying for share in emerging markets. In 2024, Shein's revenue growth slowed to 21% from 41% a year earlier as Temu competed aggressively for American wallets.

Then in 2025, Shein's revenue growth slowed further to 8% after the de minimis loophole was closed. In the first quarter, its revenue grew by a meager 1.1%. These declines don't yet include the effects of Europe's new duties, which started in early July.

New growth will likely come with lower margins. Attracting new customers--both in existing markets and untapped ones--requires heavier advertising, especially because the company primarily sells its products online. Marketing spending now represents nearly 16% of revenue, up from 11% three years ago.

It doesn't help that Shein has been selling a higher mix of nonapparel categories such as home goods that carry lower margins. Shein's operating margins were a slim 4.1% last year, about half that at H&M and a fifth of Zara owner Inditex's. It might be too early to write off Shein entirely, however.

In the U.S., Shein's largest single-country market, sales fell 14% in the first quarter. But some of that decline might have had to do with Shein's advertising decisions. U.S. credit-card spending on Shein fell starting in December, coinciding with the period when Shein dropped off the list of top Google advertisers, according to Vinci Zhang, research analyst at M Science, which tracks credit-card spending data. Spending picked back up in the second quarter, when Shein resumed its higher advertising spend.

That is one sign that Shein can keep picking up customers at higher prices if it doesn't skimp on advertising expenses. In Europe, Shein's other major market, credit-card data show the spending decline was milder following the introduction of its custom duty, Zhang noted. Shein's.