Unjust Sell-Off of Matterport Stock Points to Potential Gain of 255+%

Matterport Inc Key to Trillion-Dollar Metaverse

Matterport Inc (NASDAQ:MTTR) is a spatial data company whose technology will likely be a cornerstone of the emerging metaverse. While the company’s easy-to-use camera technology can easily create a “digital twin” of any real-life space, investors haven’t been enthralled with its performance of late.

Despite reporting solid fourth-quarter results and record full-year results in February, Matterport Inc’s first-quarter outlook was, for retail investors, underwhelming. They responded by kicking Matterport stock off a cliff, causing it to fall by approximately 25%.

Over the ensuing days, MTTR stock touched a record low of $5.71, a far cry from its December 1, 2021 record high of $37.60. The stock has since recovered slightly from its February 24 low, now trading around $7.00 per share.

Wall Street analysts think Matterport stock is sitting in bargain territory, giving it an average 12-month price target of $15.33 and a high estimate of $25.00. This points to potential gains of 115% and 258%, respectively.

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Why the bullishness for Matterport Inc? It’s all about the metaverse.

Chart courtesy of StockCharts.com

Why the Metaverse Brings Opportunities

The metaverse promises to upend everything we know about the Internet.

With the metaverse, we can develop and own a multi-directional network of 3D worlds. Over the coming years, many people will work, play, shop, bank, socialize—you name it—in the metaverse. (Source: “Metaverse Users Will Be Granted God-Like Powers to Create Their Own Virtual World Just by Speaking Things Into Existence, Zuckerberg Reveals,” Daily Mail, February 24, 2022.)

In a nutshell, the metaverse provides an advanced, immersive, and inter-connected digital experience that uses artificial intelligence (AI), augmented reality (AR), and virtual reality (VR) to connect networks, social media, gaming, cryptocurrencies, and work.

We don’t have all the technology to make the metaverse a full reality yet, but we know what it will look like.

In the metaverse, users can buy virtual plots of land with non-fungible tokens (NFTs) and buy other items with cryptocurrencies. In 2021, the average price for a parcel of virtual land in the four main metaverse platforms doubled from $6,000 in June to $12,000 by December.

Internet-savvy companies and developers of hardware, software, and virtual platforms that support the metaverse are expected to gain a strong foothold in this emerging, multi-trillion-dollar opportunity.

The metaverse market was worth $47.6 billion in 2020 and is forecast to hit almost $829.0 billion in 2028. (Source: “Metaverse Market,” Emergen Research, last accessed March 16, 2022.)

Conservative banks are typically the last ones to get on board new technologies, but it looks like some financial institutions are aware of what’s at stake with the metaverse.

In February, JPMorgan Chase & Co (NYSE:JPM) revealed a “lounge” in “Decentraland,” a 3D universe generated by blockchain technology. (Source: “JPMorgan Bets Metaverse Is a $1 Trillion Yearly Opportunity as It Becomes First Bank to Open in Virtual World,” Fortune, February 16, 2022.)

About MTTR Stock

Matterport Inc could be the foundation upon which the metaverse is built. As mentioned earlier, Matterport’s 3D data platform can make digital twins of real-life spaces. Individuals and businesses can then virtually walk through and collaborate in those digital spaces. (Source: “Fourth Quarter 2021 Earnings,” Matterport Inc, February 16, 2022.)

When the company started 10 years ago, its technology was used primarily by the real estate market. Buyers and renters could remotely view properties online. Because of the accuracy of the company’s technology, it has been adopted by architects and engineers, retailers, insurance companies, the travel and hospitality industry, factories, and warehouses.

Matterport Inc currently has more than five million spaces captured digitally in its library, and that number will continue to grow. The company recently expanded its global footprint into Brazil and China.

The company’s digital-twin technology is expected to be used in the metaverse to create digital versions of any physical space.

In January, Matterport announced that it had acquired Enview, Inc. for $37.0 million. (Source: “Matterport Completes Acquisition of Enview to Bring Powerful Property Insights and Analytics to Millions of Digital Twins,” Matterport Inc, January 6, 2022.)

Enview, Inc. is a pioneer in the field of AI for 3D spatial data. The company’s platform has been used to solve mission-critical challenges including infrastructure protection for Fortune 500 energy companies, automation of property analytics for insurance and disaster recovery applications, and logistics and mobility applications for national security customers.

The acquisition will help Matterport Inc speed up the development of its next-generation spatial data analytics platform.

Record 2021 Results for Matterport Inc

In February, Matterport announced that its fourth-quarter revenue increased by 15% year-over-year to $27.1 million. Wall Street analysts had been looking for growth of 6.4%. Moreover, the company’s annualized recurring revenue was $66.1 million. (Source: “Matterport Announces Record Full Year 2021 Financial Results and More Than 500,000 Subscribers,” Matterport Inc, February 16, 2022.)

Matterport’s subscription revenue in the fourth quarter went up by 32% year-over-year to $16.5 million. The number of its total subscribers essentially doubled to 503,000, compared to the fourth quarter of 2020.

Matterport Inc’s fourth-quarter 2021 net loss swelled to $161.0 million, or $0.66 per share, from a fourth-quarter 2020 net loss of $3.1 million, or $0.09 per share. The losses were partially fueled by the costs of going public in 2021.

In the fourth quarter of 2021, the company’s adjusted net loss (which excludes one-time items) was $25.1 million, or $0.10 per share. In the fourth quarter of 2020, Matterport reported an adjusted loss of $2.4 million, or $0.01 per share. Wall Street analysts had been expecting an adjusted loss of $0.09 per share.

Matterport Inc’s full-year revenue was up by 29%, at $111.1 million, while its full-year net loss increased to $338.2 million, or $2.58 per share. The company’s adjusted net loss in 2021 was $0.23 per share, compared to an adjusted loss of $0.07 per share in 2020.

Business Outlook

For the first quarter of 2022, Matterport Inc said it expects to report an adjusted net loss of $0.15 to $0.13 per share on revenue of $25.5 to $27.5 million. Wall Street analysts had been calling for a net loss of $0.07 per share on revenue of $26.7 million. (Source: “Matterport, Inc. (MTTR),” Yahoo! Finance, last accessed March 16, 2022.)

For full-year 2022, Matterport expects to report revenue in the range of $125.0 to $135.0 million, representing growth of 12.6% and 21.6%, respectively. The full-year net loss is projected to be in the range of $0.52 and $0.47. Wall Street analysts are forecasting revenue of $160.4 million and an adjusted net loss of $0.23.

“Looking forward, the physical world is going digital,” said RJ Pittman, chairman and CEO. (Source: Matterport Inc, February 16, 2022, op. cit.)

“Every industry on every continent is embracing digitization, and I am more confident than ever about the company’s outlook for 2022 and the decade ahead.”

Analyst Take

Matterport Inc beat the Wall Street consensus estimate on its fourth-quarter revenue and only missed the consensus estimate on its net loss by one cent.

In 2021, the company doubled its subscription base, increased its spaces under management by 54%, raised its subscription revenue by 47%, and improved its total revenue by 29%.

Matterport Inc continues to experience high demand for its products, but, like the rest of the world, it faces headwinds such as the global supply chain crunch, soaring inflation, and the Russian invasion of Ukraine.

These headwinds will abate, though, which should help Matterport stock recover over the coming quarters.