Shein IPO Valuation Analysis
My base case valuation of Shein is market cap of US$26 billion, lower than the target IPO valuation range of US$30 billion to US$40 billion that the company is seeking.
Given the lack of upside, I have a Negative View of the Shein IPO.
I estimate Shein to generate net revenue of US$42.8 billion (up 2.3% YoY) in 2026, US$44.4 billion (up 3.7% YoY), and US$47.5 billion (up 6.9% YoY) in 2028.
Shein Comparable Companies Valuation Analysis
My base case valuation of Shein is implied market cap of US$26 billion, which is lower than the target IPO valuation range of US$30 billion to US$40 billion that the company is seeking. Given the lack of upside, I have a Negative View of the Shein IPO. The company was valued as high as US$98 billion in 2022.
My base case valuation of US$26 billion for Shein is based on P/E of 22.4x my estimated net profit of US$1.2 billion for the company in 2027. The target P/E multiple of 22.4x is a 20% premium to the comps’ average P/E multiple in 2027. My valuation sensitivity analysis suggests a range of US$16.7 billion to US$37.5 billion.
In my earnings estimates, I have assumed net margin of 2.6% for Shein in 2027, which is much lower than the comps’ average net margin of 11.8% in 2027. Shein’s net margin has declined significantly from 8.7% in 2024 to 4.9% in 2025. I have assumed the company’s net margin to decline further to 1.3% in 2026 but improve to 2.7% in 2027.
The comps’ net margins also declined from 14.3% in 2024 to 11.9% in 2025 and is expected to decline further to 10.6% in 2026. In other words, the overall decline in net margins for Shein has been much more severe than the comps from 2024 to 2026.
Overall, depending upon how much Shein is able to turn around its operations and improve its profitability, the earnings and share price of the company are likely to be highly volatile along with those changes.
