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Chinese‑founded fast‑fashion giant Shein has extended its losing streak in early trading on the third session of its Hong Kong IPO on Thursday. Analysts say the muted market performance signals investors are reassessing its growth prospects, weighed by mounting regulatory headwinds in its key US and European markets and slowing revenue growth in the past months, but stress that the retailer’s distinctive China‑based industrial supply‑chain and large global user community continue to stand as key competitive assets.

Shares of Shein extended decline in the morning trading on Thursday. The stock tumbled 5.22 percent to HK$43.6 on the third trading day following its Monday IPO.

Shein shares opened flat at the offer price of HK$48.56 on Monday before slumping as much as 10 percent to HK$43.72 on the first listing day.

Experts note that Shein’s weak market performance after its Hong Kong IPO reflects the secondary market’s reassessment of the company’s future outlook.

Europe and the US represent Shein’s core revenue markets. Ongoing shifts in local trade and environmental regulations may push up long‑term operating costs, which could put pressure on its sales and profit margins. Against these external factors, the market has adopted a more prudent pricing stance, Cheng Weiqiong, an industry expert on textile‑apparel brands, told the Global Times on Thursday.

“Since May 2025, the removal of the US de minimis exemption has had an adverse impact on our sales in the US and the overall growth of company revenues, and has contributed to an increase in our fulfilment expenses as a percentage of net revenues, although we have since observed signs of normalization in consumer purchasing behavior and sales trends in the US,” said the prospectus.

It said that “In the EU, products purchased from us or through our marketplace and shipped to Europe that previously relied on the EUR 150 exemption are subject to increased costs, which may have a material adverse effect on our business, financial condition and results of operations.”

US‑sourced revenue in this quarter fell 14.3 percent year‑on‑year, accounting for 22.5 percent of total revenue. Revenue from Europe represented 32.1 percent of total revenue in the first quarter of 2026.

Despite these external headwinds, experts noted that Shein retains notable industrial supply‑chain strength and a strong user base.

Within the apparel sector, its supply‑chain capability built on small‑batch and rapid‑reorder production sits at a relatively high industry standard. Drawing on numerous small‑ and medium‑sized domestic garment manufacturers in China, Shein conducts small‑batch product testing, fast replenishment and high‑frequency new‑item launches. Compared with ZARA and other global retail peers, this digitally‑driven supply‑chain responsiveness still delivers tangible first‑mover and channel‑related value, according to Cheng.

Shein said in the prospectus that the Large‑scale Automated Test and Reorder (LATR) model enables it to quickly iterate and deliver products. It entails testing new products by launching them in small initial batches of approximately 100 to 200 items, evaluating customer feedback in real time, and restocking products that are in demand in as few as five days.”

With more than 2 million apparel styles, it is able to restock products in as few as five days, and its inventory turnover days were just 36 days in 2025, according to the prospectus.

The user engagement metrics also show resilience, as stated in the prospectus. “Active customers increased from approximately 186 million in 2023 to approximately 273 million in 2025 at a compound annual growth rate of 21.2 percent, and increased from approximately 241 million in the twelve months ended 31 March 2025 to approximately 281 million in the twelve months ended 31 March 2026.”

The annual customer order frequency remained broadly stable at 3.8, 4.0, 4.0, 4.0 and 3.9 for the years ended 31 December 2023, 2024 and 2025 and the twelve months ended 31 March 2025 and 2026, it said.

“Against multiple headwinds, Shein retains its model‑driven strengths. Whether it can convince capital markets of the sustainability of its profitability will be pivotal to its market‑cap trajectory,” Cheng said.