Matterport Is a Pioneer, But Isn’t a Buy Yet

  • Matterport (MTTR) stock is down to $6.70 per share, compared to around $33 per share in November 2021.
  • Matterport revealed 98% year-over year subscriber growth for 2021.
  • But macro trends are hindering MTTR stock, and it’s not a solid buy until those ease up.
Matterport company logo on a website with blurry stock market developments in the background, seen on a computer screen through a magnifying glass. MTTR stock.
Source: Dennis Diatel / Shutterstock

Matterport (NASDAQ:MTTR) is a spatial data company headquartered in Sunnyvale, California, and founded in 2011. MTTR stock focuses on the datafication and digitization of the real world. A central product offering is Matterport digital twins. It turns buildings or objects into data, creating accurate multi-dimension copies. It’s vital tech in a large and growing market — but that doesn’t make MTTR stock a buy just yet.

Why is it so important? The solution allows for virtual tours and virtual shopping in residential, retail and storage spaces. It can be accessed anytime from anywhere. Digital twin users can customize the asset virtually and see how the space would look with certain furniture or a particular design.

It is an exciting new technology that operates in different verticals with enormous potential, especially with the rise of the Metaverse.

MTTR stock delivers solutions to a variety of industries, including real estate, travel, hospitality and architecture. You can get a sense of the digital twin product experience on the official website, where Matterport explores the Nasdaq MarketSite and showcases what is like to ring the ceremonial bell.

MTTR Matterport $6.70

MTTR Stock History

In July 2021, the 485-employee company had a special purpose acquisition company (SPAC) reverse merger with Gores Holdings VI. MTTR stock was listed on the Nasdaq stock exchange, with a debut valuation of $4.2 billion. That provided the company with $605 million of liquidity to fuel a high-growth business model.

Fast forward to today, and the current market capitalization of the company is hovering around $1.9 billion, with a price of around $6.70 per share. Volatility for the last 12 months (LTM) is right around 90 for Matterport, compared to SPDR S&P 500 ETF (NYSEARCA:SPY) volatility of 15 for the same period. Total return is also lagging compared to the broader market, with its LTM return at -46% compared to SPY ETF of 8%.

The chart below displays the MTTR stock performance since its merger compared to the S&P 500 Index, Nasdaq 100 Index and Dow Jones Industrial Average Index.

MTTR stock performance

Mechanics Behind MTTR Stock

The latest earnings report, for the fourth quarter of 2021, disclosed that subscription revenue grew 47% year-over-year (YOY) and total revenue grew 29% from the year before.

As with all companies competing in the software as a service space (SaaS), a critical metric is the total number of paid subscribers. For MTTR stock, the total subscriber number was up 98% year-over year. The company boasts over 500,00 subscribers across different Matterport verticals.

Subscription revenue represents 61% of the revenue, as per latest statements. Matterport has now acquired 6.7 million spaces under management in 177 countries. The leading tech firm has also strengthened management by hiring seasoned veterans from Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL)  and Salesforce (NYSE:CRM). In 2021 the spatial data leader acquired Enview, a geospatial analytics software. 

This year, Matterport went into a strategic partnership with Amazon (NASDAQ:AMZN) Web Services (AWS) in order to make their products more accessible. Matterport for iPhone and Android also enhanced mass adoption and usability.

MTTR Stock Fundamentals

Total revenue for fiscal year (FY) 2021 was $111.2 million. This figure represents a 29% jump compared to $85.9 million in FY 2020. However, this is a slowdown when compared to FY 2020, where MTTR stock achieved 86% total revenue growth. The company expects to generate around $125 million to $135 million in revenue for 2022 and a 31%-34% increase in subscription revenue.

Net income for FY 2020 was -$14 million and -$338 million in FY 2021. Free cash flow (FCF) for FY 2020 was -$8.5 million vs -$47 million in 2021.

MTTR stock fundamentals

Should You Invest in Matterport?

Wall Street is concerned with Matterport being able to keep up with increasing expenses, investing in research and development and loan repayments, especially considering the rise in interest rates.

We are also seeing worrying macro trends around the world. The Russian invasion of Ukraine, supply chain issues, inflation, rising interest rates and geopolitics are impacting the overall market. The current economic environment makes it hard for companies like Matterport to grow and thrive as a listed entity.

I consider MTTR stock an industry pioneer with ample talent and a great product roadmap. The company manages to deliver critical value to its client base. Matterport operates in a fascinating and growing — but unpredictable — industry. Delivering client value does not always equate to managing shareholders and stock performance expectations. Macro trends are blocking MTTR stock from growing. Until there are strong indicators that show otherwise, I would rather not buy this stock.

On the date of publication, Jonathan Tang did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Jonathan Tang has gained extensive experience in the financial services industry in London. He has completed valuable projects for companies such as Bloomberg, London Stock Exchange Group and FactSet. He holds a master’s degree in Investment & Risk Finance and has completed an MBA course at the London School of Economics. Jonathan has a passion for fintechs that democratize investing, stock market and public equities, ETFs, start-ups and real estate.

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