Matterport is a play on a relatively new market that can be called many things including 3D capture, spatial data, reality capture or digital twins.
The stock has recently been flying high since the end of October over hype that Matterport will be a key player helping Facebook build the Metaverse.
Third quarter earnings only produced 10% year-over-year revenue growth, which is not much for a growth company.
The thesis for this company is simple. Investors that put money into Matterport believe that the company is in the very early stages of a massive growth opportunity.
Matterport is a buy for aggressive growth investors willing to speculate but risk-averse investors should avoid this stock in the current environment.
da-kuk/E+ via Getty Images Matterport (NASDAQ: MTTR ) only recently came public as a SPAC in late July of 2021, as a play on a relatively new market that is called many things including 3D capture, spatial data, reality capture or digital twins. When the company first came on the market, not many people were aware of what the company does, so it took a few months before the stock has started gaining traction in the market. Data by YCharts When most investors hear that Matterport is a digital twin company, they yawn, probably because digital twin is a relatively new term and not everyone knows what it means yet. However, when most investors hear that Matterport technology can be used with AR/VR technology, they get more interested and finally when investors hear that Matterport technology can be used to build the Metaverse, then investors get really excited and start buying the shares hand over fist, with many not even aware of what they are actually buying.
Since Facebook changed its name to Meta (NASDAQ: FB ) and a few people did a little research and discovered that Facebook and Matterport have been in a partnership since late June, both analysts and investors have connected the dots and concluded that Matterport could be important in building Zuckerberg’s Metaverse. That realization has sent the stock price up +44% since the end of October. Data by YCharts Reasons To Be Cautious
Among the reasons to be really cautious about buying into the hype of Matterport is that the company came public through the non-traditional route of a SPAC acquisition. Rightly or wrongly, SPACs have a poor reputation and are notorious for having poor performance on the stock market, likely for the reason that most SPAC companies are early-stage speculative companies and with the possibility of the Federal Reserve getting aggressive, many investors are not in a speculative stock buying mood.
Matterport should be considered a very speculative stock because the stock is mostly firing higher on the possibility of what the company could be in a world in which the Metaverse is very important but people should realize that the Metaverse itself is also a speculative idea in the here and now.
Currently, Matterport does not really have the fundamentals to get growth investors really excited today. In the third quarter, the company only produced 10% revenue growth year-over-year and that is growing off of a very low base. The rise in the stock during November can mostly be attributed to investors speculating that growth will accelerate in 2022 because of all the potential in the new partnerships and exciting announcements that the company is making, which is expected to start bearing fruit next year. However, the company still must execute its vision and that vision is likely to play out over multiple years and not just one year. Reasons to Be Excited
Source: Matterport Q3 2021 Earnings Presentation
The thesis for this company is simple. Investors that put money into Matterport believe that the company is in the very early stages of a massive growth opportunity where there is very little competition at the moment. What The Company Does
In an article written by Matt Bell , Co-Founder of Matterport, he explains that every object in sophisticated 3D video games, 3D training simulations, and other interactive 3D content are currently made by hand in a very expensive process using 3D modeling software, which he describes as being analogous to painting in a 3D world, while describing what Matterport does as the equivalent of taking a picture in a 3D world. When you really think about it, what is easier, taking hours to paint a scene or simply taking a snapshot of the same scene? That is the analogous difference between using solutions from Unity […]