Matterport (NASDAQ:MTTR) stock illustrates something I have been doing for decades. Being early to the party is as bad as being late.
I boosted the internet in 1989. I talked about what is now the internet of things in 2003. I was hyping the cloud in 2005. By the time the party arrived, I was bored and headed for the door.
This gave me a great reporting career. But it also made for poor investment decisions.
If you bought Matterport stock last year, you know how I feel.
Easy Come, Easy Go
Matterport digitizes spaces so they can be outfitted with furniture and utilities before being sold or rented. Chinese builders desperate for buyers were among their early customers. Some American landlords have also gotten into it. Matterport uses 3D cameras to create the spatial data. The value is in the data.
Matterport’s data was hyped last year as a metaverse play. The idea is that people would live and work in virtual worlds that were analogs of the real thing. This sent the shares as high as $33 each last November. They opened today at $6.75.
During the hype cycle, Matterport changed their pricing structure from a license to a subscription. Over time, this should mean continuous and rising revenue. In the short-term, it has brought disappointment, a loss for the year of $338 million, $1.61 per share, on revenue of $111 million.
Losing $3 for each $1 that came in was bad enough. The guidance was worse. Matterport expects to lose about $145 million this year, 47 to 52 cents per share, with revenue of $125 to $135 million. Management said the number of subscribers nearly doubled last year and subscription revenue rose 47%. But this is not what you want to hear with geopolitical tensions mounting.
MTTR Stock has Further to Fall
Even with its recent fall, Matterport is still worth over $1.75 billion. That is 12 to 14 times revenue for a company that is losing money hand over fist. Chief Executive Officer R.J. Pittman is still filled with metaverse hype, but you can’t live on hype.
Optimists blame global supply chain issues. Even fans of the stock, like InvestorPlace.com’s own Ashley Cassell, admit it is spending a lot on its future growth.
Realists, like Investorplace.com’s Thomas Niel, say it is too early to buy the stock. Matterport listed $159 million in cash and $264 million in “marketable securities” on its books at the end of December. Given the current state of the market, I would discount that securities number. Given the company’s own trajectory, Pittman may have less than a year before he must sell more shares and water down existing shareholders to stay in business. It is possible the company will be sold before then, maybe to Meta Platforms (NASDAQ:FB), but that would be as distressed merchandise. The sale price is unlikely to match today’s stock price.
The Bottom Line on MTTR Stock
Having spent over four decades writing about technology and investing in it, I’ve learned some things. Don’t put all your eggs in one basket. Don’t buy tech for a short-term hit. Don’t buy last year’s model.
Most importantly, don’t get in too early. I discussed this problem when I wrote about Matterport last month. As I wrote then, the potential is enormous. The reality is something else.
Matterport may have what it takes to build a digital analog of the real world. Its file formats might become industry standards. But I don’t think it’s capitalized well enough, in today’s market, to stay that course and make you money. This is not the drone you’re looking for.
On the date of publication, Dana Blankenhorn held no positions in companies mentioned in this story. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
