The wealth of Shein Global Holdings Ltd. CEO Sky Xu has plummeted by $15 billion, a stark contrast to his previous net worth of over $23 billion when the fast-fashion giant was valued more highly than the parent companies of H&M and Zara.
Shein is set to go public in Hong Kong at a valuation of just over a quarter of its $100 billion worth in 2022. At the listing price, Xu's personal wealth, based on his 30% stake, is estimated to be around $8 billion, according to the Bloomberg Billionaires Index.
The significant decline in Xu's fortune over four years is attributed to Shein's struggles with tariffs, political scrutiny, and increasing competition. The timing of the initial public offering (IPO) has also been unfavorable, with the surge in artificial-intelligence companies overshadowing other sectors and diminishing investor interest in e-commerce.
"They definitely missed the window," said Sam Wyatt, an international-equities portfolio manager at U Ethical Investors. "E-commerce is now a less attractive story to investors than AI."
While some AI companies have seen substantial gains, the performance of Hong Kong IPOs has been mixed. Shares of beverage maker Eastroc Beverage Group Co. and pig breeder Muyuan Foods Co. are trading below their listing prices. The founders of bubble-tea chain Mixue Group have also seen their wealth decrease by over a fifth since their company's IPO last year.
A Shein spokesperson did not respond to a request for comment.
Xu, 43, founded Shein in 2012 with three partners, leveraging their experience in search-engine marketing to build the online retailer known for its inexpensive, trendy clothing. The company experienced significant growth during the Covid-19 pandemic, fueled by young shoppers.
However, revenue growth has slowed since then. Shein's strategy of circumventing import taxes in the US and Europe through small shipments was disrupted last year when the Trump administration ended a key tariff exemption, and the European Union introduced a fixed customs duty on small parcels.
"The direction of the market is changing, not in Shein's favor, especially in the recent years," commented Sheng Lu, a professor in fashion and apparel studies at the University of Delaware. He added that AI is also leveling the playing field for Shein's competitors, enabling them to better and more quickly cater to evolving consumer tastes.
Shein's earlier attempts to go public in New York and London were hampered by scrutiny over its labor practices. Despite moving its global headquarters to Singapore to distance the brand from its Chinese origins, the company ultimately required approval from Chinese regulators for its IPO.
"Shein was the hottest topic two to three years ago — a Chinese firm that could have IPO'ed in the US because it already had a strong fast-fashion brand in the US and strong consumer recognition," said Jason Hsu, chief investment officer at Rayliant Global Advisors. "But the hot topic now is AI."
