Goldman spent $220mn propping up Shein’s IPO. Shares fell 38% anyway

For a decade Shein sold a simple promise: a dress that costs less than lunch, delivered to the door within days. Its first month as a public company tested a different promise, the one an investment bank makes when it takes a company to market. If the shares sink in the first weeks, the bank running the deal will step in and buy. Goldman Sachs kept that promise for Shein right up to the last share it was allowed to buy. The stock kept falling after the buying stopped.

The purchases were not a bet by Goldman’s own traders on the future of fast fashion. They came from a standard safety net built into large share sales, called price stabilization, and a new filing shows that in Shein’s case the bank used all of it. That detail turns a dry exchange notice into a verdict on a listing investors had waited years to see.

When Shein sold its shares in Hong Kong at HK$48.56 each, the banks handed out more stock than the headline size of the deal, covering the extra shares with stock borrowed from Apex Sight Holdings. That left Goldman, acting as stabilizing manager, with shares to give back and two ways to get them. If demand ran hot, it could buy new shares from Shein at the offer price. If the price sagged, it could buy them on the open market, which props the price up. The cash for that buying came from selling the borrowed shares to IPO investors in the first place, so it was a mechanism, not a wager.

Shein’s filing to the Hong Kong exchange shows Goldman took the second route all the way. Its affiliate bought back all 41,998,500 borrowed shares in the market, at prices between HK$35.90 and HK$48.56, and the option to buy new stock from Shein lapsed unused when the stabilization period ended on September 26. The Financial Times put the total at roughly $220 million. A lapsed option is the quiet tell: banks only exercise it when a stock trades above its offer price. The lowest price Goldman paid sat more than a quarter below what public investors paid on day one.

The support ran out two days before Shein’s first results as a listed company. Revenue for the first half of 2026 rose 1% to $20.13 billion, while operating income fell by about 53% and adjusted net profit dropped 55.6% to $499 million. The second quarter was worse: adjusted profit fell 67% to $228 million, cutting the margin to 2.1% from 6.2% a year earlier. The shares fell as much as 14% the next day, their steepest drop since the debut, and the FT reports they are now 38% below the listing price.

The reasons reach well beyond one company. Shein pointed to higher freight costs as oil prices climbed and to slower growth in its core retail business. In July the European Union ended the customs exemption that let cheap parcels cross its borders one at a time without duty, the rule a whole generation of Shein and Temu orders was built on. In the United States, card data from Bloomberg Second Measure show Shein’s sales falling more than 10% in the three months through August. Jefferies analysts wrote that second-quarter profit “likely missed consensus by a wide margin” and that forecasts for this year and next may be too optimistic. Chief executive Sky Xu said shoppers facing higher inflation are becoming more selective about what they buy.

The listing itself was already a climbdown. Private investors valued Shein at about $100 billion in 2022 and around $66 billion in a later round. After plans to list in New York and then London stalled, the company raised about HK$13.6 billion in Hong Kong at a valuation of roughly $26.5 billion. By the day after its results, Bloomberg counted some $10 billion of that market value gone. For Goldman, the episode is a footnote: the same bank reported the best quarter in its 157-year history in July, driven by the record SpaceX listing.

For one month, the most reliable buyer of Shein stock was the bank that had sold it. That buyer has left the market, and the price now belongs to investors who have read the half-year numbers.

Tags: IPO, Goldman Sachs, fast fashion, Hong Kong Stock Exchange, Shein, Sky Xu