Matterport: The Recent Price Decline Makes MTTR Stock a Buy
InvestorPlace - Stock Market News, Stock Advice & Trading Tips MTTR stock has been under significant pressure, especially after management revised down revenue estimates, but could become a takeover target...
Spatial-data and 3D digital tech company Matterport (NASDAQ:MTTR) stock is down over 60% year-to-date (YTD). What a difference several weeks have made for MTTR stock. On Dec. 1, 2021, the price went to $37.60 and hit a record high. Since then, share have lost almost 75% of their value.
Now, MTTR stock is changing hands below $8. Meanwhile, the stock's 52-week range is $7.50 – $37.60. The market capitalization stands around $2 billion.
Regular InvestorPlace.com readers will remember that Matterport went public in July 2021 via a reverse-merger with Gores Holdings VI, a special purpose acquisition company (SPAC). As a result, the spatial imaging technology company raised $640 million in gross proceeds.
Matterport's 3D scanning technology converts a given space into its digital twin. Investors have been excited about the potential of its software, especially in relation to the metaverse, which could grow at a compound annual growth rate (CAGR) of 44% between 2021 and 2028.
Given the rapid decline in the MTTR stock price, shareholders wonder what could be next for the company. Although short-term choppiness is likely to continue, buy-and-hold investors could consider adding Matterport to their portfolios now.
Third Quarter Results
Matterport issued third-quarter (Q3) metrics on Nov. 3. The top-line number missed the analyst estimates. Revenue was $27.7 million, implying 10% growth year-over-year (YOY). Yet, investors were pleased to see a 36% increase in subscription revenue.
Total subscribers reached 439,000, up 116% from Q3 2020. Hence, the quarterly subscription revenue hit $15.7 million. A year ago, it was $11.5 million. An increasing number of real estate agents use the software tool for showcasing their portfolios.
Meanwhile, non-generally accepted accounting principles (GAAP) loss per share was 6 cents. I should highlight that the company is also quickly burning a considerable amount of cash.
According to Matterport Chief Executive Officer RJ Pittman, "[Matterport is] pleased to report another strong quarter, more than doubling our subscriber count to 439,000 subscribers, and increasing our Spaces Under Management by 62% to 6.2 million Spaces."
Prior to the release of the quarterly results, MTTR stock was around $24. Then, on Dec.1, it saw an all time high of $37.60. One of the key catalysts was the announcement that the Matterport platform would be available on Amazon's (NASDAQ:AMZN) Amazon Web Services (AWS) marketplace.
In addition, late October saw the name change that led to excitement around Meta Platforms (NASDAQ:FB), which was formerly known as Facebook. As a result, companies in the mixed reality (MR) and metaverse space, such as MTTR stock, also got significant investor attention.
However, the tech rout of 2022 has put significant pressure on growth shares like Matterport, which is trading below $8. The company will announce Q4 financials on Feb. 16 after market close. Management has already lowered the full-year revenue outlook to a range of $107 million to $110 million from the previous estimate of $120 to $126 million.
Adding MTTR Stock to Portfolios
Among 6 analysts polled, MTTR stock has an average "buy" rating. The consensus of these analysts for the 12-month median price target stands at $27, implying upside potential of nearly 240% from current levels. The 12-month price estimates currently range between $14 and $38.
Matterport shares trade at 10.6 times trailing sales and at a price-to-book (P/B) ratio of 9.72x and price-to-sales (P/S) ratio of 21.64x. These valuation metrics imply that despite the decline in price, MTTR stock is not necessarily cheap. Therefore, there could still be volatility for the spatial-data technology group ahead.
Long-term investors who are not concerned about such short-term choppiness in MTTR stock could consider investing now. Their price target should be analysts' estimate of $27.
Others who are interested in Matterport stock but want to diversify some of the risk away could buy an exchange-traded fund (ETF) that holds MTTR, as well. Examples include the ETFMG Real Estate Tech ETF (NYSEARCA:HHH), the Roundhill Ball Metaverse ETF (NYSEARCA:METV), the iShares Robotics and Artificial Intelligence Multisector ETF (NYSEARCA:IRBO), or the BNY Mellon US Small Cap Core Equity ETF (NYSEARCA:BKSE).
The Bottom Line on MTTR Stock
2022 has not started well for investors in many growth and tech names, including MTTR stock. And the volatility in broader markets may not be over yet.
However, long-term investors in MTTR stock would need to look beyond current swings in price. Analysts suggest geospatial data can be used in urban planning, public safety, construction and real estate planning, mining, healthcare management, and natural disaster planning, among other areas. Therefore, Matterport stock is likely to keep growing in the quarters ahead.
Interested readers with a two- to three-year horizon could consider buying Matterport stock now. In addition to being a metaverse play, the company could also find itself a takeover target, which would send MTTR stock considerably higher.
On the date of publication, Tezcan Gecgil 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 InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.
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