Should I Buy Matterport (MTTR)? Finance YouTuber Analysis

The analyst is bullish on Matterport because its acquisition by CoStar will allow CoStar to compete with Zillow's in-house 3D tour technology. He believes Matterport's technology, which enables 3D home tours and floor plans, will become essential for real estate listings, and its integration into CoStar's platforms will give it significant market power.

“so that's one of the reasons that I continue to be bullish on matterport my shares would ultimately convert into co-star shares”

The YouTuber suggests buying Matterport stock due to a pending acquisition by CoStar. He calculates a potential 30-32% upside if the deal closes, based on the current share price and the proposed buyout terms of $2.75 cash plus CoStar stock. He believes the deal is likely to close given it's a strategic acquisition for CoStar and the premium offered to Matterport shareholders.

“given the 30 32% premium from where Shares are trading right now I think that's a pretty attractive premium for investors”

The YouTuber, who owns Matterport shares, is holding them due to the pending acquisition by CoStar. He believes the deal is highly likely to close because it's a strategic acquisition for CoStar, offering significant benefits like increased engagement on their platforms and putting competitors like Zillow in a difficult position. He sees a potential 18% upside from the current price if the deal closes, despite the risk of the stock falling if the acquisition fails.

“I think this is a deal that's going to close the 20% premium is one that I'm holding on to so I own shares before this deal was announced I'm not selling them.”

The YouTuber plans to hold Matterport shares until the acquisition by CoStar closes, citing a remaining 17% premium between the current trading price and the buyout price of $5.50 per share. He believes the deal is unlikely to be blocked by regulators and CoStar has sufficient resources, making it a favorable short-term hold for the remaining upside.

“on Monday morning Shares are trading at 470 as I'm recording right now as I'm finishing up recording so that means that 's about a 17% premium still to be had if you just hold on to shares until this deal actually closes and as a share holder that's what I plan on doing at this point”

The analyst is bullish on Matterport due to its spatial computing technology, which uses AI to map indoor/outdoor spaces for various use cases like real estate. He highlights the potential for generative AI tools to create floor plans and disruptive applications. Despite current financial needs, the company's low valuation (enterprise value of $200 million excluding cash) and goal to be free cash flow positive by end of 2024 present significant upside.

“When you pull out their cash on the balance sheet the value of the business is only about $200 million so if they are able to swing to free cash flow positive which they have said they want to do by the end of 2024 I think this could be a phenomenally well position starting to hit that growth curve and trading at a relatively low valuation.”

The YouTuber highlights Matterport's AI-driven property intelligence tools as a sustainable long-term application of AI, moving beyond just chip sales. They argue that Matterport's approach to automation, using AI to make tedious tasks faster and cheaper, creates significant value for customers and offers high-margin, capital-efficient growth for the company. Customers are increasingly paying more for the insights derived from digital twins than for the twins themselves, indicating a strong business model.

“For us this is a very intentional strategy just to create more efficiency and hence real long-term profitability for the company.”

The analyst is intrigued by Matterport, a spatial computing company that uses AI to map spaces and create usable files for various applications, from real estate to commercial design. He sees significant upside potential if its spatial data becomes highly valuable for businesses and consumers, allowing it to become a horizontal services company tied into numerous apps, driven by its generative AI capabilities.

“So out of these three matterport is definitely the most speculative but I think it also has the most upside as a result if this spatial data is able to be turned into usable data and proves to be extremely valuable for businesses and for consumers that puts matterport in a very good position to become a horizontal services company.”

The analyst believes Matterport, despite recent stock drops, is making significant progress in key areas like subscription revenue growth and new AI-powered features (Property Intelligence) that add substantial value for real estate professionals. He highlights the strong balance sheet with $420 million in cash against a $650 million market cap, providing downside protection and asymmetric return potential over a 5-10 year horizon as the company builds out its platform.

“if you take a 5 to 10 year outlook for matterport I think this is the kind of company that has asymmetric return potential”

The analyst sees Matterport trending in the right direction operationally, with accelerating subscription revenue growth, improving gross margins, and decreasing operating costs. The company has a strong balance sheet with ample cash to fund losses and aims for profitability in 2024, suggesting potential for long-term growth despite past stock performance.

“I think matterport is the kind of company that could build out a really nice niche in the software business.”

The analyst suggests avoiding Matterport if it fails to become free cash flow positive by the end of 2024. He argues that the company lacks a wide technological moat, making it vulnerable to competitors copying its technology. High stock-based compensation is also a concern, eroding potential upside for investors.

“they need to get to free cash flow positive by the end of 2024 or the company I think is ultimately really in trouble.”

The YouTuber owns Matterport and views it as an intriguing long-term holding due to its strong balance sheet with significant cash and no debt, providing a long runway for growth. While recent growth has been slow and steady, not meeting market expectations, the company is showing operational improvements, moving closer to profitability, and developing promising new products and partnerships that could drive future growth.

“I own the stock it's ultimately a business I'm really intrigued by but still a lot of questions and that's what investors are thinking a lot about right now.”

Travis Hoium is watching Matterport closely, suggesting a potential buy if their new generative AI initiative, 'Genesis,' proves successful. He believes the AI tools could significantly enhance Matterport's value proposition, especially in the commercial real estate and construction markets, by allowing rapid iteration on building designs and space utilization. The recent price increase for their subscription plans also indicates potential for margin improvement, but the key is whether the AI can drive wider adoption and everyday use of the platform.

“this generative AI tool is the kind of thing that I think could get a lot of attention if matterport can roll it out well so that's what I'm going to be watching in the future here”

The analyst is cautiously optimistic about Matterport, noting its significant cash reserves provide a long runway to achieve profitability. While growth has slowed, partnerships with companies like Autodesk and increasing subscriber numbers suggest potential for the platform to become a key player in construction and real estate. However, the company still needs to demonstrate consistent top-line growth and reach cash flow positivity.

“I'm cautiously optimistic about this company I have owned it since the SPAC merger was announced so I'm excited about what it's building but at the end of the day we've got to see this company get to cash flow positive and that's still probably a couple of years off at this point.”

The YouTuber, a current shareholder, is considering exiting his position in Matterport due to concerns about decelerating subscription revenue growth and the fact that product revenue, which is growing faster, is actually burning cash. He believes the company is struggling to become the platform he initially envisioned and that its best-case scenario might be an acquisition.

“Matterport is a company that I would really love to see succeed but it's a stock that I may simply exit at this point because I don't see the business turning into the technology company that I hoped it would be.”

The analyst suggests Matterport will benefit from the anticipated 'arms race' in virtual and augmented reality, sparked by Apple's Vision Pro release. As Apple and Meta compete for VR market share, software makers like Matterport are expected to see increased demand.

“while the two big Tech names will benefit it's also going to drive software makers like Unity software ticker U and matterport Inc ticker mttr”