Amazon (AMZN) founder Jeff Bezos didn't see it coming... Neither did the CEOs of Zara and H&M – two of the world's biggest fashion brands.
This Is How American Investors Lose Out
By Vic Lederman, editorial director, Chaikin Analytics
Amazon (AMZN) founder Jeff Bezos didn't see it coming...
Neither did the CEOs of Zara and H&M – two of the world's biggest fashion brands.
I'm talking about the rise of fast-fashion e-retailer Shein.
Founded in China, the company launched in the U.S. back in 2017. At the time, it was just another struggling newcomer in the fashion e-commerce business trying to make its mark.
But Shein was doing something different from its competitors. And this would turn out be a game changer...
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Shein operated a direct-to-consumer ("DTC") model that leveraged technology and China's rapid manufacturing supply chain.
The company was able to churn out thousands of new designs in small quantities to its website – daily.
It monitored which designs were selling well in real time and increased production of those almost instantly. Designs that didn't sell well were pulled out.
This made stocking up on large inventories a thing of the past. And those cost savings were passed on to consumers who loved the idea of buying shirts and blouses at $2 each or a new pair of pants for $10.
Shein went from having less than 500,000 U.S. users and just over $1 billion per year in sales in 2017... to 17.3 million U.S. users and about $32 billion in sales by 2023.
In the chart below, you can see the massive U.S. user growth over the past few years...
Shein also captured about 50% of the U.S. fast-fashion market.
At its peak in 2022, it reached a valuation of $100 billion. That made it China's largest e-commerce and DTC unicorn. And if the company ever listed on a stock exchange, it would be one of the five largest consumer initial public offerings ("IPOs") in history.
Even after all the pessimism towards Chinese companies, Shein still carried a $64 billion valuation as of 2023.
And in November, Shein disclosed that it planned to file an IPO on the New York Stock Exchange.
So when the company recently announced it was reconsidering its IPO in the U.S., it was a gut punch for American investors.
Folks, Shein may have originated in China, but it's arguably one of the best business success stories to capture the hearts and wallets of American consumers since Netflix (NFLX) launched its streaming business in 2007.
Shein turned an $800 million profit in 2022, which likely grew massively last year.
It's a brand-new growth play on the U.S. consumer much like Amazon or Netflix during their earlier years. And many U.S. investors would love to have the option to directly invest in such a company.
But rising geopolitical tensions between the U.S. and China has made this unlikely.
Now that Shein is looking to pursue a public listing either in Hong Kong or the U.K. instead, ordinary American investors stand to lose out.
You see, the U.S. remains the world's largest consumer market. It boasts about $16 trillion in annual personal consumption expenditures.
The U.S. is also one of the most openly accessible consumer markets. And foreign companies are always looking for a chance to break into the American market.
Not all succeed.
So when a company like Shein comes along with a winning formula and rewrites the rules of the game, it's an opportunity for investors.
They can potentially get in on the kind of growth that made Amazon and Netflix the giants they are today.
But don't get me wrong. Not being able to list in the U.S. is also a loss to Shein.
As the world's largest stock exchange, the U.S. market has unmatched investor resources that could help Shein attain higher levels of valuation faster than anywhere else.
Higher valuations would then allow Shein to raise more money to finance further growth.
My point is simple...
It doesn't matter where great businesses come from. If they can find their way into the world's largest stock exchange, it's a win-win for them and U.S. investors.
Good investing,
Vic Lederman
Editor's note: Here at Chaikin Analytics, we've identified a way for investors to win right now. And it all has to do with an election-year event that's headed straight for U.S. stocks.
In fact, our founder Marc Chaikin just went on camera last night to break the story and share all the details about what he sees coming.
As he says, the kind of financial year – or perhaps decade – you're able to achieve could very well hinge on whether you're able to position yourself properly before this event arrives. If you missed Marc's broadcast, you're in luck – you can watch the replay right here.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.04%
14
15
1
S&P 500
+0.3%
199
234
65
Nasdaq
+0.86%
45
46
9
Small Caps
+0.64%
516
1014
383
Bonds
+0.71%
Information Technology
+1.11%
38
25
1
— According to the Chaikin Power Bar, Large Cap stocks and Small Cap stocks are Bullish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Materials
+1.44%
Discretionary
+1.26%
Industrials
+1.12%
Real Estate
+1.11%
Utilities
+0.94%
Financial
+0.6%
Information Technology
+0.59%
Staples
-0.19%
Energy
-0.58%
Communication
-0.7%
Health Care
-1.64%
* * * *
Industry Focus
Capital Markets Services
40
20
2
Over the past 6 months, the Capital Markets subsector (KCE) has outperformed the S&P 500 by +5.13%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #6 of 21 subsectors and has moved down 5 slots over the past week.
Top Stocks
PIPR
Piper Sandler Compan
EVR
Evercore Inc.
NTRS
Northern Trust Corpo
* * * *
Top Movers
Gainers
HRL
+14.56%
FMC
+9.94%
AMD
+9.06%
ENPH
+6.64%
MNST
+5.82%
Losers
XEL
-8.64%
BBWI
-5.44%
MRNA
-5.38%
INCY
-2.7%
REGN
-2.18%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
AVGO
BF.B
PLUG
CHPT
No earnings reporting today.
Earnings Surprises
ZS Zscaler, Inc.
Q2
$0.76
Beat by $0.18
HRL Hormel Foods Corporation
Q1
$0.41
Beat by $0.07
CELH Celsius Holdings, Inc.
Q4
$0.15
Missed by $-0.03
NTAP NetApp, Inc.
Q3
$1.94
Beat by $0.25
COO The Cooper Companies, Inc.
Q1
$0.85
Beat by $0.07
* * * *
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