Shein reveals FTC investigation into its US operations as it prepares for Hong Kong IPO, seeking $40 billion to $50 billion valuation

Fast-fashion e-commerce giant Shein has revealed that its U.S. operations are under investigation by the Federal Trade Commission (FTC) as it prepares for a potential Hong Kong initial public offering (IPO). The company is seeking a valuation between $40 billion and $50 billion, a significant decrease from its previous valuation of $64 billion in 2024.¹²³⁶⁷

The nature of the FTC's investigation remains unclear, but the agency has previously scrutinized companies for practices related to hidden fees, privacy issues, and deceptive business practices. Shein stated, “We are actively cooperating with the FTC … Although it is possible that we may reach a settlement with the FTC in connection with the investigation, we currently cannot predict the probable outcome of the investigation and the timing of such outcome.”⁵

The company warned that the investigation's outcome could lead to significant financial costs, potentially affecting its financial condition and operating results. The FTC, as the U.S.'s primary consumer protection agency, focuses on “dark patterns”—design tricks and psychological tactics that encourage consumers to part with their money or data. Shein employs tactics like countdown timers and gamified discounts to create urgency among consumers.⁴

Despite the ongoing investigation, Shein's Hong Kong listing has received approval, although a trading start date has yet to be announced. The company was valued at $98.2 billion in a 2022 fundraising round following the Covid-19 pandemic, highlighting the volatility of its market position amid regulatory scrutiny.