Shein Shares Hit Record Low as First Post-IPO Earnings Show Adjusted Profit Down 66.6%
Shein's Hong Kong shares fell as much as 13.95% to a record low after its first post-IPO earnings report showed Q2 adjusted net profit down 66.6% year-on-year, with US and European revenue shrinking under tariff pressure. The stock is now down 37.5% from its September 1 IPO price, erasing over $9 billion in market value.
What happened
Shein's Hong Kong-listed shares fell as much as 13.95% on Tuesday, September 29, 2026, touching an all-time low of HK$31.44 after the fast-fashion platform released its first earnings report since its September 1 IPO, before trimming losses to about 10.7% by around 11:00 local time, according to Jornal Económico. The filing, sent to the Hong Kong stock exchange on Monday, showed second-quarter adjusted net profit fell 66.6% year-on-year to about $228 million (roughly €200 million), even as reported net profit rose 247% to about $2.398 billion (roughly €2.11 billion), a gap driven mainly by gains related to the market value of convertible shares, for which the company gave no further detail. The stock's low on Tuesday represents a cumulative fall of 37.5% from the IPO price set for the September 1 debut, and the drop has erased over $9 billion from Shein's market valuation since listing.
The quarter's operating picture was markedly weaker than the headline profit line. Q2 revenue was $11.082 billion (roughly €9.75 billion), up just 0.9% year-on-year, while operating profit fell 66.3% to $235 million (roughly €206 million). Quarterly net margin fell from 6.2% to 2.1%, squeezed by escalating jet fuel and air-freight costs driven by Middle East conflicts, per the Ground News aggregation.
Founder and chairman Chris Xu attributed the squeeze to "a sharp rise in oil prices and logistics costs amid geopolitical tensions in the Middle East," adding: "We made the deliberate decision to absorb these costs, which we consider transitory, rather than pass them on to consumers." He said the second half will remain "uncertain" due to "tariff headwinds and logistics cost volatility," but expects order recovery in the fourth quarter, which the company calls its "main promotional window" with Christmas and Black Friday. Priorities include expanding European inventory, better consumer-behavior forecasting, more warehouse automation, and a shift toward higher-priced garments to improve profitability.
Why it matters
The earnings report is the first hard test of Shein's valuation since its Hong Kong debut, and the market's verdict was severe: a 37.5% cumulative fall from the IPO price within four weeks of listing. The core business, stripped of convertible-share valuation gains, is under pressure on two fronts at once. Costs are rising, with oil prices and air-freight rates lifted by Middle East tensions, while the company's two largest markets are shrinking. US revenue fell 6% year-on-year in Q2, and European revenue fell 13.9% to $3.8 billion (roughly €3.2 billion).
The European decline is tied to policy. Since July 1, 2026, the EU has levied a €3 tax on each distinct product type in small e-commerce shipments from outside the EU, and as RetailDetail EU reports, Shein pre-emptively raised European prices and cut advertising spend in the second quarter. That combination of higher shelf prices and lower marketing intensity landed directly on European sales.
The geographic mix is shifting in response. Rest-of-world markets grew in importance, with their share of total revenue rising from 36.1% in mid-2025 to 43.7%, and revenue in those destinations up 21.6%, which Shein attributed to "growth in order volume and expansion of the customer base, especially in Latin America." For the first half as a whole, attributable net profit more than doubled, up 111.7% to $2.299 billion (roughly €2.02 billion), on revenue up 0.97%, while operating expenses grew 3.95%. The widening gap between reported and adjusted profit, and the company's lack of detail on the convertible-share gains, will likely draw scrutiny from investors weighing how much of the headline number reflects the underlying retail business.
How it is being covered
The story is carried by 70 sources, split 21% left, 46% centre and 33% right, according to ground.news. Factuality ratings are strong, with 36 of 39 rated outlets in the high or very high bands. Ground.news flags no blindspot, meaning coverage of the earnings drop spans the political spectrum without a notable partisan gap.
What to watch
The fourth quarter is the immediate test. Xu expects order recovery in the company's "main promotional window" around Christmas and Black Friday, and any shortfall there would compound the post-IPO share decline. Watch also for further detail on the convertible-share gains that account for the bulk of reported profit, since the company offered none in the filing. In Europe, the effect of the €3 parcel tax on pricing and demand will be visible in coming quarters, as will the pace of Shein's pivot toward higher-priced garments and Latin American expansion. Oil prices and air-freight costs, which management called transitory, remain the swing factor for margins.
By the numbers
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