Shein shares fall 10% after first-half operating profit plunges
The drop follows a flat Hong Kong debut and comes despite net income more than doubling to $2.30 billion.
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Shein shares fell 10% after the company reported a sharp drop in first-half operating profit, even as net income more than doubled to $2.30 billion. The shares had traded flat in their Hong Kong debut earlier this month.
Operating profit fell 50.4% in the first half of 2026, according to AJ Bell. Free Malaysia Today reported operating income down 52.9% over the same period, with net revenue up 1% year-on-year to $20.1 billion. Bloomberg reported that rising costs and weakening demand squeezed margins, with the deterioration accelerating in the second quarter. Shopifreaks reported that second-quarter adjusted net profit fell 67% to $228 million, which it linked to higher jet fuel and air freight costs tied to the Middle East conflict.
In a filing to the Hong Kong Stock Exchange, Shein chairman Sky Xu said the external environment is expected to remain uncertain in the second half of 2026, pointing to tariff headwinds and logistics cost volatility, according to AJ Bell.
The figures cut against the net income number reported earlier this month, which had already failed to lift the stock at its Hong Kong debut. A doubling of net income alongside a sliding operating profit points to margin pressure from costs such as tariffs and price competition rather than genuine earnings strength, undercutting the earlier reading that the market was simply pricing in known gains. A flat debut followed by a 10% drop suggests investors are now reacting to deteriorating fundamentals rather than muted momentum. Shein's initial public offering valued the company at about $26.3 billion, far below the near $100 billion valuation it reached in private fundraising rounds in 2022, according to Free Malaysia Today. Bloomberg reported that the share drop has pushed Shein's market value down to about $17.5 billion, from roughly $26 billion at its Hong Kong listing on September 1.