Merging company

Taiwan’s virtual beauty brand struggles to debut on Wall Street –

By Michelle Toh, CNN Business

Taiwan’s latest entrant to Wall Street 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% off their listing price since they began 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 hit around $1 billion after it merged with Provident Acquisition Corp., a special purpose acquisition company (SPAC), days before listing. Shares of the newly merged company began trading last Monday under the symbol “PERF”, and have since slid about 46% from the 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 usually go public only to raise funds from investors which are then used to buy existing businesses.

Daniel Ives, managing director and senior equity analyst at Wedbush Securities, said investors might be cautious about Perfect Corp. because “in a risk-free market, an augmented reality game with Taiwanese roots is a half-empty name”.

“Tech stocks across the board have been weak and any additional 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 over it. Since Russia’s invasion of Ukraine this year, some foreign investors have expressed concerns about the risk that China could increase its military force against Taiwan.

Perfect Corp. said it raised approximately $119 million as part of the deal.

The company chose to list in the United States because much of its customer base 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 during the video call.

Chang launched Perfect Corp. in 2015 as part of a unit of Cyberlink, a technology company in Taiwan, which later spun it into a separate company. Cyberlink continues to be one of the company’s investors, alongside global brands such as Chanel, Goldman Sachs and Snap.

Chang said the company would use proceeds from its SPAC merger to expand in Southeast Asia, fund research and development, and double new capabilities in its technology, such as allowing users to try accessories beyond. jewelry.

“We just joined jewelry, fashion,” she 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 caters to more than 450 brands, Chang said.

It all started with a selfie, according to Chang.

Around nine years ago, Chang frequently took photos of herself to share with friends and family, and often found herself wishing there was a way for users to instantly tweak 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 link virtual beauty to real-world beauty?” Chang called back. “I believe that if you let [the] the user tries more, he will buy more.”

This assumption has allowed the company to push ahead with brands, even though popular consumer platforms such as Instagram offer similar filtering technology.

Perfect Corp. is one of the few Taiwanese companies to list 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 biggest suppliers, had its own day on Wall Street. The company also went public in New York in April after merging with a SPAC, raising at least $335 million in cash at the time. Its shares are down 68% since the start of the year.

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