Taiwan’s latest addition to Wall Street has had a rough ride since its IPO a week ago.
Shares in Perfect Corp., a software company that allows users to virtually try on makeup or jewelry from brands like Estée Lauder, LVMH and Shiseido, have fallen down more than 40% of their quoted price since trading on the New York Stock Exchange a week ago.
Perfect Corp. lends its technology to beauty and fashion brands. It uses augmented reality and artificial intelligence to help users test products online before buying them.
The company’s valuation rose to about $1 billion following its merger with Provident Acquisition Corp., a special purpose acquisition company (SPAC), days before going public. Shares of the newly combined company traded under the ticker symbol “PERF” last Monday and have since fallen about 46% from the opening price of $15.80.
The broader S&P 500 index is down about 14% over the past five days, according to data provider Refinitiv Eikon.
SPACs are shell companies with limited or no assets. They usually only go public to raise money from investors, which is then used to buy existing companies.
Daniel Ives, managing director and senior equity analyst at Wedbush Securities, said investors could look to Perfect Corp. be careful because “in a risk-averse market, an augmented reality game with Taiwanese roots is a half-empty name.”
“Tech stocks have been weak across the board and any additional geopolitical risks will be a concern in this market,” he told CNN Business.
Taiwan is a self-governing democratic island that the communist leadership in Beijing has long claimed as part of its territory, though it has never ruled over it. Since Russia’s invasion of Ukraine earlier this year, some foreign investors have expressed concerns about the risk that China could increase its military power against Taiwan.
Perfect Corp. said it raised approximately $119 million under the deal.
The company chose to list in the United States because a majority of its customers are based there, founder and CEO Alice Chang said in an interview with CNN Business. She said she wore her own “digital makeup” and virtual earrings on the video call.
Chang founded Perfect Corp. in 2015 as part of an entity at Cyberlink, a technology company in Taiwan that it later spun off as a separate company. Cyberlink remains one of the company’s investors alongside global brands such as Chanel, Goldman Sachs (GS) and Snap (SNAP).
Chang said the company will use the proceeds from its SPAC merger to expand in Southeast Asia, fund research and development, and duplicate new capabilities of its technology, such as B. to allow users to try on accessories beyond jewelry.
“We just joined jewelry and fashion,” she said. “That’s just the beginning.”
Perfect Corp. is part of Software-as-a-Service Industry. The company now has offices in cities around the world, including New York, Paris, Tokyo and Shanghai, and supplies more than 450 brands, Chang said.
The company had sales of $40.8 million last year and is targeting sales of more than $100 million by 2024, according to regulatory filings.
According to Chang, it all started with a selfie.
About nine years ago, Chang frequently took photos of himself to share with friends and family, and often wished there was a way for users to instantly polish their looks. The idea eventually led to a mobile app called YouCam, which allows users to instantly retouch their skin without looking “fake,” she said.
The question was, “How can I combine the virtual beauty with the beauty of the real world?” Chang recalled. “I think if you let me [the] Users try more, they will buy more.”
The company has advanced this hypothesis in its pitch to brands, even as popular consumer platforms like Instagram offer similar filtering technologies.
According to Dealogic data, Perfect Corp. one of a handful of Taiwanese companies to list in the United States in recent years.
His arrival comes just months after Gogoro (GGR), a Taiwanese electric scooter startup backed by Al Gore and one of Apple’s biggest suppliers, had its own tag on Wall Street. The company also went public in New York in April of this year after merging with a SPAC, raising at least $335 million in cash at the time. Its shares are down 68% so far this year.