Matterport (MTTR)

Disclaimer: This is not financial advice. I own Matterport stocks. The article has been published on February 10th, 2022. Current stock price: $8.55 (close of day)

Matterport is a risk asset. Risk assets include a high degree of volatility and I don’t recommend buying stocks with leverage. 10-20% swings in a day are not unusual.

What is Matterport

Matterport is the leading spatial data company focused on digitizing and indexing the built world. Matterport’s all-in-one 3D data platform enables anyone to turn a space into an accurate and immersive digital twin which can be used to design, build, operate, promote, and understand any space.

Matterport went public via SPAC and the merger has been completed on July 23rd, 2021 (with the announcement in February 2021).

As of February 10th, 2022, the CEO of Matterport is R J Pittman.

Investment Thesis for Matterport

Matterport at its core enables real estate agents to build a higher quality business. They turn buildings into data. And we do that by creating a dimensionally accurate, photorealistic, 3D digital twin of any property, a home, an office, a hotel. Some investors are also watching Matterport because of the hype around Metaverse.

Although I believe Matterport has great technology that can empower Metaverse, it’s all high speculation and the proof of concept is yet to be proven. It’s also unclear if this is Matterport’s long-term strategic interest as it differs from their current business model.

In 2021, Matterport stock growth has been driven by a higher appetite for risk. and reached a peak price of $37.6 per share. With inflation skyrocketing and investors moving to risk-off strategy.

Matterport last reported earnings for its fiscal 2021 third quarter saw revenue come in at $27.66 million, a year-over-year increase of 10%, and a $1.49 million miss on consensus estimates. The company also lowered its fiscal 2021 revenue guidance to be no more than $110 million, down from estimates of sales to between $120 million and $126 million.

Hence, with the current market cap standing at $2.07 billion, Matterport trades on a price to sales ratio of 24x.

Leo Imausen has published analysis of Matterport back on December 23rd 2021 and has addressed the 53x price to sales ratio with the following:

“Bears would be right to state that this does not make sense for a company that just barely realized double-digit revenue growth. While bulls would also be right to state that subscription revenue grew faster at 36% to $16 million. This was on the back of paid subscribers increasing to 53,000, a 35% increase from the year-ago period. When you include the free tier subscription offering, total subscribers reached 439,000. This was a 116% year-over-year increase. Gross profit margins stood at 51.26% a sequential decrease of 900 basis points.”

With the 24x price to sales ratio, we have a more interesting case for bulls, and earnings and guidance on February 16th can add hopium. 

From an insider trading perspective, R J Pittman has done an uninformative buy on February 1st of $6,860,993 (SEC report).

Matterport (MTTR) Earnings

Report DateFiscal QuarterForecast/EPSLast Year’s EPSEPS YoY Change
Feb 16, 20222021 (Q4)-0.10 / –
Nov 03, 20212021 (Q3)-0.07 / -0.06
Aug 11, 20212021 (Q2)– / -0.04
May 26, 20212021 (Q1)– / -0.02

Analysts Rating Consensus

Matterport Analysis Consensus

Conclusion

Matterport’s use case is clear and the potential for growth is there. Its historical revenue growth has reflected this. Since December, the revenue multiple has decreased to less than half which makes it interesting. The challenge Matterport is facing is to deliver revenue on a scale and I believe the foundation is there.

Investment horizon – minimum of 6 months.

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