"Unicorn of the Sea" Shein plans to go public in the US! The target valuation is as high as $90 billion.

According to the information obtained by Zhitong Finance APP, Shein, the Chinese cross-border e-commerce giant, is aggressively promoting its valuation of up to $90 billion, laying an important foundation for its upcoming initial public offering (IPO) in the US stock market. This valuation level far exceeds the company's valuation in private transactions. Insiders have revealed that Shein has informed potential investors that its goal is to achieve a valuation of $80 billion to $90 billion through the IPO. However, considering the volatility of the global market, the timing of the stock sale remains uncertain.

Insiders revealed that Shein's valuation in private transactions has fallen below the $66 billion valuation at the time of its financing in May. Based on recent secondary market transactions, the market value of the company is estimated to be between $50 billion and $60 billion.

Although the valuation in private transactions does not necessarily reflect the company's actual value, this gap highlights investors' concerns about the challenges Shein faces, including intensified competition and copyright infringement allegations. These factors may complicate Shein's ambition to achieve a massive IPO.

In 2022, Shein was the third most valuable startup globally, with a valuation of approximately $100 billion in a financing round. Since then, as investors have become more cautious about the value of risk assets in the face of economic uncertainty and rising interest rates, the company's valuation has declined along with other startups and large tech companies. According to media reports, in July, the overseas popular short video platform TikTok's parent company, ByteDance, saw its valuation in the secondary market drop below $300 billion, a decrease of at least 25% compared to the same period last year.

Insiders stated that discussions about Shein's IPO, including its specific valuation and timing, are still ongoing and no final decision has been made. Representatives from Shein declined to comment.

What challenges does Shein face?

Shein is one of the pioneers of "ultra-fast fashion," selling trendy items such as shirts and swimsuits with prices as low as $2. During the COVID-19 pandemic, the company's direct-to-consumer (DTC) e-commerce sales skyrocketed in the United States, quickly becoming one of the most downloaded shopping apps in the country. Its main target customers are teenagers and young women.

Shein, the cross-border e-commerce platform that has been called the "most mysterious Chinese unicorn" by the investment community, was founded in China over a decade ago and recently relocated its headquarters to Singapore. While Shein has announced plans to source clothing from other countries, a majority of its clothing produced for the US market still comes from suppliers in southern China. It is worth noting that earlier this year, the cross-border e-commerce giant hired SoftBank Group Corp. and globally renowned executive Marcelo Claure to help manage its operations in Latin America. This online cross-border retailer is facing fierce competition from Temu, a subsidiary of the Chinese e-commerce giant Pinduoduo. Compared to Shein, which is seeking a valuation of up to $90 billion for its US IPO, Pinduoduo's total market value in the US stock market currently exceeds $140 billion.

According to data compiled by Bloomberg Second Measure, which analyzes consumer credit card and debit card transactions, Temu's sales in the US market in September were more than twice that of Shein, surpassing Shein for the first time in May. These two competitors have previously sued each other, with Shein accusing Temu of trademark and copyright infringement, while Temu claims that Shein uses bullying tactics to prevent clothing manufacturers from cooperating with their platform, violating antitrust laws. Shein stated that the lawsuit has no legal basis and the company will actively defend itself.

Insiders say that despite the increasingly fierce competition, this online cross-border retailer is expected to achieve a net profit of about $2.5 billion this year. According to media reports, an investor report once showed that the company's net profit in 2019 was about 1 billion yuan (approximately $137 million).

It is understood that Shein has been trying to diversify its product portfolio under its own name, not just limited to clothing and accessories. In August of this year, the company acquired about one-third of Sparc Group, which owns one of its competitors, Forever 21, through a joint venture. As part of the deal, Forever 21's products will be made available to Shein's online customers. In October, Shein further expanded its third-party product scale by acquiring the UK online brand Missguided from Frasers Group Plc.