Shein has made a shaky entry into the stock market. Can he regain his charm?

Shein built its global fast fashion business by selling low-priced clothing based on real-time trends and bringing new designs to market quickly, while reducing inventory waste.

But the conditions that helped fuel its rapid growth are changing.

Shares of the Singapore-based retailer were trading lower for the fourth day in a row and have lost 17.5% since their Hong Kong market debut on Tuesday.

The initial market reaction puts the spotlight on whether Shein can revive growth as the low-cost model that fueled its rise comes under increasing pressure.

Analysts say Shein will have to prove it can compete on more than just price, localize more operations and find new sources of growth outside its key markets of the United States and Europe.

“I think it shows that they have a lot of work to do to show investors that this is a business that can continue to grow,” said Josh Gilbert, lead analyst for APAC at investment platform eToro.

A $5 dress is getting harder to sell

Shein reported revenue of $41.8 billion in 2025, compared to $38.7 billion a year earlier. In the first quarter of this year, the company posted a net loss of $99 million, compared to profits a year earlier.

“The United States and Europe remain the key markets, but the easy part of growth is over,” Gilbert said.

Both markets have tightened rules that had allowed low-value imports to enter duty-free. The United States ended de minimis treatment for shipments from China and Hong Kong in May last year, while the EU also suspended its customs duty exemption for low-value imports worth up to €150 in July.

The EU has introduced a temporary tax of 3 euros per item. Almost 5.9 billion low-value items entered the EU in 2025, according to data from the European Commission.

“The structural advantage that allowed Shein to ship a $5 dress around the world for next to nothing has disappeared,” Gilbert said.

The changes pose a bigger challenge for Shein as it raises prices. Gilbert said that as tariffs drive up prices, shoppers who come to Shein primarily for price could begin to compare quality, “a fight Shein hasn’t had to have before.”

Bryan Gildenberg, CEO of Retail Cities, said Shein’s ability to link technology to a network of manufacturers who can respond in real time remains an advantage, but competitors are closing the gap.

“That to me still seems like a competitive advantage, even though the fast fashion industry is catching up digitally,” Gildenberg told CNBC.

Limits of the Shein model

Marguerite LeRolland, senior manager of global fashion insights at market intelligence firm Euromonitor International, said Shein will need to redefine its value proposition beyond “low prices and constant newness,” including curating its market offerings and developing services.

LeRolland also said Shein needs to improve its brand image as regulators and public opinion become increasingly critical of the company.

“The company will have to change its model,” LeRolland said, pointing to greater localization as tariffs and regulatory requirements pressure Shein’s cost advantage in the United States and Europe. Shein will also need to gain scale in Asia Pacific, the Middle East, Africa and Latin America to sustain global growth, he added.

But expanding into new markets brings its own challenges. While Gildenberg pointed to Southeast Asia as a potential area for growth, he said it was probably one of the most competitive e-commerce markets in the world.