Fast-fashion e-commerce giant Shein is actively preparing for an IPO on Hong Kong’s stock market. According to the latest disclosed prospectus, it is expected to list as early as the end of August to the beginning of September. However, Shein recorded a net loss of $99 million in the first quarter of 2026, compared with a profit of $395 million in the same period last year. The company attributes the main cause of the quarterly loss to the Trump administration in the United States canceling the “de minimis exemption” system in May 2025.
Turnaround in Q1 2026: From profit to loss, with a 14.3% drop in U.S. revenue
Shein’s prospectus discloses the following key financial figures:
Total revenue in 2024: $38.7 billion
Total revenue in 2025: $41.8 billion
Net profit in 2025: $2.06B (down 38.7% from 2024)
Net loss in 2026 Q1: $99 million (net profit of $395 million in the same period last year)
U.S. revenue in 2026 Q1: $2.04 billion (down 14.3% year over year)
Trump tariff impact: After de minimis exemption is canceled, the U.S. tax rate rises from 62.5% to 87.5%
Shein directly attributes the main cause of the first-quarter loss in the prospectus to U.S. trade policy. In May 2025, the U.S. canceled the “de minimis exemption” system for low-value goods imported from China, causing the tariff-rate cap on Shein products in the U.S. to jump from 62.5% to 87.5% (and the floor to rise from 0% to 10%).
This policy directly undermines the low-tax business model Shein had relied on. To cope with rising costs, Shein has adopted a “cost-plus” pricing strategy, shifting most of the increased costs onto U.S. consumers. The U.S. is Shein’s largest market, with Q1 U.S. revenue down 14.3% year over year.
New EU fees, Middle East market, and ESG controversies
Starting in July 2026, the EU will charge a €3 fee on low-priced e-commerce imports to respond to competition from China, adding new pressure to Shein’s European business. Although the U.S. war with Iran has not produced a major impact on overall operations, it has affected consumer demand in the Middle East and disrupted shipping routes through the Strait of Hormuz.
Meanwhile, Shein continues to face ESG controversies, including labor conditions in its factories, the addictive nature of its apps, and the environmental impact of its air-cargo models. Despite the company emphasizing zero tolerance for labor abuse and investing in risk management, these issues remain potential variables on its IPO path.
FAQ
When is Shein’s Hong Kong stock IPO expected to take place?
Based on the latest prospectus information, Shein is expected to carry out its initial public offering (IPO) on Hong Kong’s stock market as early as the end of August to the beginning of September 2026. The exact timeline will be subject to Shein’s official announcement.
What is Shein’s financial performance in Q1 2026?
According to the prospectus, Shein recorded a net loss of $99 million in Q1 2026, while it posted a profit of $395 million in the same period last year. U.S. market Q1 revenue fell 14.3% year over year to $2.04 billion. The company attributes the loss mainly to a sharp increase in tax rates after the “de minimis exemption” system in the U.S. was canceled in May 2025.
What is the specific impact of Trump tariffs on Shein?
After the U.S. canceled the “de minimis exemption” system in May 2025, the tariff-rate cap on Shein products in the U.S. rose from 62.5% to 87.5% (with the floor rising from 0% to 10%), leading to a 14.3% year-over-year decline in Q1 revenue in the U.S., Shein’s largest market. Shein has adopted a “cost-plus” pricing strategy, shifting most of the increased costs onto U.S. consumers.
