When it comes to opinions and analyses about Matterport (NASDAQ:MTTR) stock these days, you can’t ignore the metaverse.
As a leader in 3D spatial visualization technologies, the company’s platform enables a more immersive experience than was ever possible through the internet. Logically, such an innovation lends itself to metaverse-based applications, thus seemingly boding well for MTTR stock.
Even if you’re not familiar with what the metaverse is, you’ve probably been gaslighted to the point where you simply nod your head politely whenever someone brings up the topic. While others can explain it better than I could, I define the concept as the next generation of connectivity.
Assume the internet is an evolution. The first wave saw the technical ability to connect computers with each other in a borderless fashion. Next, the second wave brought us search engines like Google that could categorize the various sites that occupy the world wide web. Today, we’re in the metaverse stage, where our mental essence can be integrated with the internet.
Moving forward, Matterport could potentially dominate the segment of the metaverse that deals with residential and commercial real estate. For instance, rather than attending an open house in person, you can do so virtually. Eventually, the technology will improve to the point where it almost feels like you’re really there. That’s the long-term narrative (or at least one of them) for MTTR stock.
If it sounds a bit over the top and fantastical, you’re probably not alone. As folks like to say, money talks and (something else) walks. And there’s been a lot of walking with MTTR stock, which lost nearly 7% on the Feb. 3 session and has hemorrhaged 59% year-to-date.
Is this a once-in-a-lifetime discount, or a chance for you to call it quits too?
The Post-Pandemic Paradigm Is a Non-Issue for MTTR Stock
Following the initial wreckage of the coronavirus pandemic, it became apparent to intrepid contrarians that some sectors would benefit handsomely from the crisis. For instance, Deloitte Insights demonstrated that in mid-April 2020, the returns on real-estate investment trust property indices for data centers, cell towers and industrial jumped an average of 26.3% on a year-over-year basis.
Looking back, such a dynamic was to be expected. With the framework of employment shifting from the office to the living room, connectivity-related businesses enjoyed tremendously accelerated relevance. However, the opposite was true for multifamily, office, healthcare, retail and hotel properties at the time, with the five sectors suffering an average 31.6% loss from a year ago.
Fast-forward to today and it’s obvious that more segments of the economy have recovered. For instance, housing prices have skyrocketed, which augurs well for MTTR stock. Because of fierce competition among buyers, Matterport’s 3D spatial visualization technologies have helped quicken transactions.
Still, basic economic principles suggest real estate prices will cool down as the supply of willing buyers declines. At that point, in a normalized market, prospective buyers will want to see the properties themselves anyways, making spatial 3D data somewhat superfluous.
More dramatically perhaps, Matterport might not get the commercial real estate (CRE) boost its seeking. For instance, let’s assume that the work-from-home experiment becomes permanent (I don’t think it will but again, let’s pretend for the sake of argument). In this scenario, the CRE industry would be looking to downsize. Why create giant buildings when companies can distribute and “decentralize” their workforce across the digital medium?
Yes, I’m talking about the metaverse in that case but a metaverse architecture that something like Meta Platforms (NASDAQ:FB) specializes in, not Matterport.
Nothing Beats the Real Deal
Don’t get me wrong: I’ve seen Matterport’s technology in action and it is certainly very helpful. Once circumstances normalize – as in, when (if) the asset bubble pops – I will be first attracted to property listings that leverage the company’s 3D spatial solutions.
But here’s where things get tricky for Matterport and by deduction, MTTR stock. Even if I deem a property attractive via Matterport’s platform, I’m still going to check it out. Conversely, a Matterport-less listing would also not prevent me from considering it. Either way, if a property is interesting, it’s interesting: Matterport isn’t the critical factor here.
Now, I’m willing to change my mind on MTTR stock as I am with any other investment. However, with so much red ink being splattered on the charts, I’m thinking there’s a reason for it.
On the date of publication, Josh Enomoto 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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.