00:00I guess a lot of people have argued that perhaps Xi'an might have missed the window
00:03to finally go public. What do you make of the reaction on the stock today?
00:10Well, it certainly looks like that may be true. But I would argue that it was challenged even
00:17before. We saw that with the long winding road to even get here. It had tried to list on a
00:25number
00:25of markets before. But there were really some big issues that have hurt it. It's a lot of the
00:32de minimis changes that forced essentially higher fees onto packages in the United States.
00:41So what we saw was essentially that crushed the U.S. business. And it sounds like it's going to
00:48have a similar impact in Europe as well. The best opportunity probably would have been before
00:54de minimis actually took off, but they missed that. But it's unclear how much of a difference
01:01that would have made. It probably would have had a little bit of a higher valuation,
01:04but it probably would have had to have taken a hair clip from the $100 billion at its peak.
01:13So, Charita, this is David. And apologies in advance. It's a bit noisy. I'm joining here
01:19from the field. Actually, my question is, it's fast fashion. It's fast growing, but there's a lot of
01:24competition. It's not exactly a margin business. Help us understand what the trajectory of the
01:31company looks like from the perspective of it being able to expand its margins moving forward. And we
01:37might rethink this multiple right now that the markets are currently attaching to the stock that's
01:41down. Well, the issue with fast fashion, you're absolutely right. Highly competitive. The margins
01:51are challenged. Where even Shein claims that it's going to go is to be more of a marketplace. So
01:58they're not necessarily as much in the business of manufacturing or responsible for ultimately the
02:05shipments. So I would suspect that the way that they spin this is similar to the Amazon marketplace,
02:12where you essentially allow third parties to use the equity that the website that you built,
02:21if they choose to use any fulfillment or they choose to use your manufacturers that you already
02:27have relationships with, they can. But the truth being that you basically pushed off a lot of the
02:35expenses to other third parties. The other thing that they could do is that they've claimed over the
02:41years they have these algorithms that can very quickly ascertain what the next hot trend is. There's
02:48probably a model there that they could use to sell to others. Now, I don't think that it's going to
02:54be
02:54billions of dollars, but it could be a little bit more profitable than perhaps where they are now.
03:03Now, it has the war chest, whatever the case may be. It's raised quite a bit of money. It could
03:09have
03:09raised more, of course. There was a window a few years back. But anyway, here we are. There's a ton
03:13of money still that the company's been able to raise. What do you think is the most productive use
03:19of that money? Where do we need to be watching the company spend all this cash now?
03:26I would think that where it needs to spend is in some type of technology innovation. It could be in
03:33building out that third-party marketplace. It could be in trying to formulate some sort of
03:41technology solution that is about predicting models of what could work, not just in retail,
03:49but even potentially in other physical goods categories, and certainly outside of fashion,
03:55for sure. Where these IPO dollars tend to go, though, is usually cashing out investors.
04:05And they've certainly have investors that they need to help make whole at this point,
04:13which would mean that there will likely be limited revenue, limited opportunity to actually
04:22invest that again in growing the business.
04:28So, Trita, I'm just wondering, what do you think could actually drive the stock after this listing
04:32here? I mean, what are you seeing downside of 9% the first day here? I mean, is there a
04:37chance that
04:38this valuation could even dwindle even further from here? That is entirely a possibility. So right now,
04:47the valuation is in the $26 billion range. That's actually substantially higher than most apparel
04:55retailers. So it wouldn't be surprising if it goes down further, especially if there is
05:02no clear plan or no story that they've told investors as to what they could do next that's beyond this
05:12ultra cheap, fast fashion ecosystem that is now being challenged by the elimination or essentially the
05:22imposition of de minimis rules.
05:25there is more than a gathering every single day in your group.
05:26Okay.
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