Matterport Gives Investors Reasons for Excitement and Prudence

Matterport (NASDAQ:MTTR) stock is down more than 30% in the last month. This appears to be priming the pump of some retail investors who are early speculators in the metaverse sector.

Matterport Silicon Valley exterior sign and trademark logo.
Source: Ken Wolter / Shutterstock.com

And while I believe that MTTR stock may hold a lot of promise, it will be a speculative stock as the metaverse matures. 

Even though MTTR stock only began trading publicly in July, it has drawn the attention of at least five analysts, according to MarketBeat. That’s an impressive number for a young company. And as Matterport works through the price discovery stage, it’s currently trading at about an 18% discount to the consensus 12-month price target of these analysts. 

The average annual return of the Nasdaq composite over the last 10 years is 14.4%. In my opinion, that warrants investors taking a small, prudent position in MTTR stock. 

I’ll admit to having to do some research on what a 3D spatial data company does before forming an opinion on Matterport. However, as I understand it, Matterport does virtual modeling of physical properties into the digital world. This also makes it a play in the areas of augmented reality and virtual reality.  

Matterport Has a Good Elevator Pitch 

I’ll admit to having to do some research on what a 3D spatial data company does before forming an opinion on Matterport. However, as I understand it, Matterport does virtual modeling of physical properties into the digital world. This also makes it a play in the areas of augmented reality and virtual reality.  

One difficulty that can happen with a speculative stock or asset class (like cryptocurrency) is that it’s not easy to explain the benefit of ownership briefly. And by briefly I don’t mean by dismissive snark. I mean that many investors should approach buying stock in a company that they don’t understand very well like a job interview. Only in this case, the asset in question is applying for the job – your hard-earned capital.

Many job seekers have learned the importance of having a good elevator pitch. This simply means that if you’re asked why you’re the right candidate for a particular job you should be able to explain your qualifications in a short (30 seconds), medium (less than two minutes) and long (more than two minutes) pitch, depending on the audience you’re addressing. 

In the case of Matterport, the company can point to Meta Platforms (NASDAQ:FB) using it in their metaverse plans (short). It can then mention that it already derives approximately two-thirds of its revenue from the realtor Redfin (NASDAQ:RDFN) for modeling properties (medium). And then investors can dive into the company’s future growth plans (long), which includes its transition to becoming a subscription service 

I don’t know what the metaverse will look like in five years, let alone 10 or 15 years. However, even if I just look at the utility that I know exists today, there’s a lot to get excited about with Matterport, and by extension MTTR stock.

What Could Go Wrong? 

Dealing with a speculative stock such as Matterport gives some investors reason for excitement. But that should be tempered by prudence. If the metaverse continues to expand as is forecast, there will be plenty of time for investors to add to their position as the stock moves higher. 

But the biggest risk to a stock like Matterport is that the metaverse may not develop as planned. That’s not the same thing as saying that the metaverse is a fluke. However, over the past few years investors have experienced numerous bubbles when hype exceeded actual growth.  

Start Small with MTTR Stock  

If you keep your expectations for a possible return in that range, you manage your risk while still getting in on the ground floor of what seems like a true breakthrough opportunity. As I mentioned earlier, MTTR stock has a consensus price target of $27.40 today. If the company continues to deliver on its immense promise, that price target will likely go higher. As it does, you can add to your position as conditions warrant. 

On the date of publication, Chris Markoch 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.  

Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019. 


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