Weakness Is an Opportunity in Matterport Stock

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By now, I’m sure you’ve heard of the metaverse and stocks like Matterport (NASDAQ: MTTR).

CNBC contributor Sam Shead explains the metaverse is “a sci-fi concept whereby humans put on some sort of headset or smart glasses that allows them to live, work and play in a virtual world much like the one depicted in the ‘Ready Player One’ movie.”

An image of a warehouse traced with white abstract lines

Source: Matterport

Already, there is substantial interest.

Multi-billion-dollar companies are racing for a piece of the virtual world. Celebrities are even buying metaverse real estate, including Paris Hilton and Snoop Dogg. Nike Inc. (NYSE: NKE) filed for new trademarks to design and sell virtual sneakers in the metaverse. CVS Corp. (NYSE: CVS) wants to sell virtual goods.

Walmart (NYSE: WMT) also filed for new trademarks to sell virtual goods in the metaverse. There is even a Metaverse Fashion Show, according to Vogue. If the metaverse gets as big as some hope, analysts at Emergen Research say the metaverse could be worth about $829 billion by 2028.

That could be substantial news for companies like Matterport Inc. After trading as high as $37.60, MTTR stock now sits oversold at $8.52. You can blame the market pullback for most of that. Given time, I’d like to see MTTR double, if not triple, near-term.

Matterport Is a Smart Bet on the Metaverse

Matterport provides software that digitizes parts of the real world to create “digital twins,” which can be used in a 3D platform.

Plus, Meta Platforms (NASDAQ:FB) partnered with Matterport and will release a collection of digital twins made up of residential and commercial real estate from real world environments. The company is also working with Amazon’s (NASDAQ: AMZN) Web Services Marketplace to help developers create digital twins for the Internet of Things.

The only downer at the moment is earnings.

Earnings Also Triggered the Pullback

In the fourth quarter, MTTR posted revenue of $27.1 million, which was up 15% year-over-year. Non-GAAP loss per share was 10 cents from a penny year-over-year.

For full-year 2021, MTTR revenue jumped 29% to $111 million. Its adjusted loss jumped to 23 cents from seven cents year-over-year. With guidance, the company expects to see revenue of $26.5 million and an adjusted loss per share of 14 cents, which is a midpoint. Full year 2022 guidance for $130 million was also shy of expectations for $160 million.

However, there were some silver linings.

The company’s subscription business more than doubled since 2020. This part of the company also generated $7.5 million in the first quarter of 2020 and is now expected to grow to $17 million in the current quarter. Even better, there are now 503,000 subscribers, which is about 98% higher than year-over-year numbers.

Even better, according to Motley Fool contributor Harsh Chauhan:

“Matterport is effectively a pick-and-shovel play on the metaverse, and it’s in a nice position to tap into this emerging opportunity since it has already digitally captured 208 billion square feet of real-world space for use in its platform. The company points out that it has 6.7 million digitized spaces under management, which is 100 times what any other metaverse-oriented competitor has created.”

The Bottom Line on Matterport Stock 

Despite so-so earnings and guidance, there is plenty to get excited about.

Not only is Matterport exposed to a potential $829 billion metaverse market by 2028, it is also exposed to a potential $48.2 billion digital twin market by 2026. We also have to remember that Matterport has major deals with the likes of Meta Platforms and Amazon.

At the moment, MTTR is excessively oversold. With patience and more metaverse excitement, I’d like to see the stock double, if not triple from current prices.

On the date of publication, Ian Cooper 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.

Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.

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