Shein Files For U.S. IPO

A struggling IPO market now faces a massive test

BREAKING NEWS

According to reports coming out of CNBC and Reuters, the Chinese fast-fashion megabrand Shein has confidently filed for an IPO on the U.S. market. There's a lot to unpack here: 

WHAT HAPPENED

According to multiple sources, Shein has been valued at $66 billion and is reportedly working with JP Morgan, Morgan Stanley and other banks on The Street to navigate what is actually a very tricky IPO process. Turns out, Shein has a lot of good reasons to file for their IPO confidentially. 

MOVING FAST AND BREAKING THINGS

A confidential IPO filing is actually pretty common as it allows companies to work with the SEC quietly to iron out details in their potential IPO. Shein, while really successful, has been under a lot of scrutiny for a wide variety of reasons. Their fast fashion model is genuinely groundbreaking but it comes with a lot of red flags. There are allegations that the company works with companies that use forced labor in their supply chains, they've been accused of stealing designs from independent artists too. Heck, even Congress has piled on here with the Select Committee on the Chinese Communist Party very publically investigating Shein's potential ties to political leadership in Beijing. A public IPO here can go south very quickly. But if Shein can navigate that well enough to make it to an actual debut on the public markets, investors may have a really hard time passing up on their incredible revenue and margin growth in the last few years. 

WHY IT MATTERS

It has been a really weird time for the IPO market with companies debuting high and crashing immediately. Some companies like Arm and Klaviyo have only just limped their way back to their initial IPO price after crashing hard in their first few weeks on the market. Some investors now worry that stronger companies are actually delaying IPOs so private investors can net all the gains from stronger companies without incurring all the fees from an IPO. Shein is also going to be a big test of the market's appetite for the risks that come with investing in Chinese companies. Regardless, Shein appears to have most of their filing in order and could be ready to start trading as soon as January according to sources.