Taiwan’s latest Wall Street entrant has had a rough ride since going public a week ago.
Shares of Perfect Corp., a software company that allows users to virtually try on makeup or jewelry from brands such as Estée Lauder, LVMH and Shiseido, fell. more than 40% of their listing price since they started 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 try products online before buying.
The company’s valuation rose to roughly $1 billion after it merged with Provident Acquisition Corp., a special purpose acquisition company (SPAC), days before it went public. Shares of the newly combined business began trading last Monday under the symbol “PERF” and have since fallen about 46% from their opening price of $15.80.
The broader S&P 500 index has lost about 14% in the past five days, according to data provider Refinitiv Eikon.
SPACs are shell companies with limited or no operating assets. They are usually issued solely to raise money from investors which is then used to buy existing businesses.
Daniel Ives, managing director and senior equity analyst at Wedbush Securities, said investors could be wary of Perfect Corp. because “in a risk-free market, an augmented reality game with Taiwanese roots is a half-empty name.”
“Tech stocks in general have been weak and any added geopolitical risk 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, although it has never ruled it. Since Russia’s invasion of Ukraine this year, some foreign investors have expressed concern about the risk that China could increase its military force against Taiwan.
Perfect Corp. said it raised approximately $119 million in the deal.
The company chose to list in the United States because much of its clientele is 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 started Perfect Corp. in 2015 as part of a unit of Cyberlink, a Taiwanese technology company, which later spun it off as an independent business. Cyberlink remains one of the firm’s investors, along with 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 into Southeast Asia, fund research and development and double down on new capabilities in its technology, such as allowing users to test accessories beyond the jewels
“We just got into jewelry, fashion,” he said. “This is 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 serves more than 450 brands, Chang said.
It generated revenue of $40.8 million last year and is targeting sales of more than $100 million by 2024, according to regulatory filings.
It all started with a selfie, according to Chang.
About nine years ago, Chang often took photos of herself to share with friends and family, and often found herself wishing there was a way for users to instantly polish her appearance. The idea eventually led to a mobile app called YouCam, which allows users to instantly touch up their skin without looking “fake,” he said.
The question was, “How can I link virtual beauty with real-world beauty?” Chang recalled. “I think if you let it [the] the user tries more, will buy more.”
This assumption has made the company stick with brands, even though popular consumer platforms like Instagram offer similar filtering technology.
Perfect Corp. is one of the few Taiwanese companies listed in the United States in recent years, according to Dealogic data.
His arrival comes just months after Gogoro ( GGR ), a Taiwanese electric scooter startup backed by Al Gore and one of Apple’s top suppliers, had its own day on Wall Street. The company also went public in New York this April after merging with a SPAC, raising at least $335 million in cash at the time. Its shares are down 68% so far this year.