Earnings can matter dearly in the real world. And the metaverse’s Matterport (NASDAQ:MTTR) and MTTR stock haven’t proven immune to those sometimes tangible quarterly anxieties.
But is there a chance today’s fear in MTTR is tomorrow’s more authentic opportunity?
Let’s look off and on the price chart of Matterport, then offer a risk-aligned determination aligned with those findings.
In a market putting red-like panic into investors’ portfolios on the back of real world inflation escalations and threat of war between Russia and Ukraine, shares of MTTR are an ugly standout.
Why MTTR Stock Stands Out
The spatial-data outfit whose technology allows users to create 3D digital replicas of physical spaces has seen its stock slump nearly 70% to new lows in 2022.
Looked at from another angle, MTTR stock has moved from a closing price of $20.64 on Dec. 31 to Tuesday’s lowly single-digit pricing near $6.35 a share.
And from an alternative vantage point, from November’s all-time-high of $37.60, Matterport’s valuation has plummeted from $6.5 billion to roughly $1.5 billion.
Without question, it’s been a brutal bear market for MTTR stock investors.
Of course, it’s hardly a secret sentiment surrounding growth stock narratives has been missing in action, and as a result, those companies’ shares have taken significantly larger price hits.
Shopify (NYSE:SHOP). DigitalOcean (NYSE:DOCN). Rivian Automotive (NASDAQ:RIVN). You know who they are. They’re fine examples within a much larger and diverse group of growth stocks that have taken beatings the past couple to few months.
Still, MTTR stock’s 83% loss since November is a doozy.
But given Matterport’s technology and its ability to capitalize on Wall Street’s recent, hot-as-McDonald’s cup of coffee “metaverse” buzz and help turn it a bonafide long-term growth market, investors may do well to put MTTR on their buy watchlists.
Looking Ahead
To be sure and near term, investors purchasing Matterport shouldn’t expect a party like last year’s fourth-quarter double to happen overnight. Even from today’s advantaged, much lower stock price in MTTR, a move toward $12.50 or $13 isn’t likely by late March.
The fact is quickly cooled enthusiasm for Web 3’s metaverse needs to see Wall Street showing at least some tempered enthusiasm before that type of price reaction can be achieved.
Sorry, that’s the reality MTTR stock is facing.
Also, quarterly results last week proffering markedly weaker Q1 and full-year guidance due to global pandemic-driven supply chain issues is another challenge facing MTTR stock.
Some good news is management didn’t change a prior forecast, which puts Matterport’s total addressable market for virtual spaces at roughly $240 billion.
That’s a huge number. Importantly though, and not to be ignored, that’s also a longer-term brass ring to capture.
And today following earnings getting onto that growth runway is going to take a bit longer.
Other Positives to Note
Still, there were other positives from MTTR’s report which were overlooked.
Matterport announced better-than-forecasted sales growth of 15%, led by a 32% jump in subscriptions and services revenue which ballooned 69% year-over-year. That’s something, right?
But turning a blind eye to investors who collectively sent shares to new lows for a weekly loss of more than 13% isn’t a great idea.
Also, it’s not just this past week’s MTTR shareholders that pose a problem. Wall Street’s sell side could pose a challenge going forward as well.
Buy recommendations stock of various shades for MTTR and above-the-market price targets remain the order of the day. It sounds good on the surface, but the reality for MTTR stock could prove very different.
The thing is severe price cuts like Piper’s reduction from $26 to $10 or Wedbush’s $38 to $10 cut could leave the door open to further bearish revisions.
MTTR Stock ‘Price Chart’
During MTTR stock’s short-life, shares have conspired with both bulls and bears.
First and for roughly 10 months, Matterport formed a classic weekly chart cup-with-handle which led to a breakout to new highs. I imagine that during the moonshot phase MTTR stock had it’s share of meme traders sending cute rocket man gifs announcing their successful orbit.
More recently and today’s reality as detailed above, the bears or quite simply, bulls stampeding for the exits en masse, took MTTR’s upward trajectory and sent shares crashing.
Better than any Fibonacci retracement or test of critical support could ever do, I think a rocket man illustration does a good job of sizing up the volatile and cartoonish price action that comes with Matterport.
What Now?
Fairly, if investors can visualize eight straight weeks of lower highs, all-time-lows and MTTR stock’s marginalized, small-cap valuation produced by throw-in-the-towel style volume, the reality is Matterport’s crash could reasonably act as a launch pad.
There’s no guarantees of course.
Losses, as well as negative cash flow like MTTR’s can’t go on indefinitely if a company is to survive. And like Matterport’s fantastic technology, that’s part of today’s calculus as well.
Optimistically, the good news is the problems facing Matterport right now are also hardly unique during a stock’s growth phase.
Think Netflix (NASDAQ:NFLX) or Tesla (NASDAQ:TSLA) and all hurdles navigated on the way to their legendary multi-baggers for investors. Or maybe and more similarly, consider the path of a standout growth stock like Autodesk (NASDAQ:ADSK) when considering MTTR.
All told, and with Matterport’s “next big thing” factor still in play, investors could do a whole lot worse with this type of smaller, speculative stock.
And if you’re a bit like me, buying MTTR stock might also include hedging shares with an actively-managed collar in order to capture more surreal and happier real world circumstances down the road, while avoiding always possible catastrophes in-the-making.
On the date of publication, Chris Tyler holds long positions in Matterport (MTTR) (either directly or indirectly). The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
