I don't usually get excited about IPOs or special-purpose acquisition company (SPAC) mergers because they often come with more uncertainty and risk than I want to take on as an investor. But every once in a while, there's a company that hits the market that I see as a once-in-a-lifetime opportunity
That's why this week's announcement that Matterport will merge with Gores Holdings VI (NASDAQ:GHVI) had me extremely excited. Matterport has built incredibly powerful technology for the real estate market, and its spacial data business is just starting to scratch the surface of its potential.
What Matterport does
Matterport is essentially a scanning app for buildings, turning the physical space into a digital space. The company does this with professional cameras that can quickly create a "doll house" layout with the 360-degree scans, which you can see in the image above.
This has traditionally been done with professional cameras, but the real revolution for Matterport was when it built a mobile app that could do most of the same functions with nothing more than a smartphone. Simply scan each room in your home or business and a full, shareable layout is created.
Applications for this tool span a number of industries, from real estate to insurance and restoration. And the uses -- and revenue potential -- for the technology continue to grow.
Just the beginning
As Matterport adds to its 250,000 subscribers and 4.4 million spaces under management, it has a lot of potential to both grow its user and building base and increase use cases. Management says there are 4 billion buildings globally with 20 billion spaces, which at $1 per space per month would make for a $240 billion total addressable market. Even capturing a small fraction of that would allow the company to grow rapidly from its current $100 million revenue run rate.
But the use cases as the technology becomes more widespread are incredible. If you can measure spaces automatically, analyze and troubleshoot buildings with real-time data, and share spaces with anyone around the world with little more than a smartphone, there's incredible value to be unlocked. The possible impact on construction, real estate sales, furnishing spaces, and even building management is hard to project. And Matterport is just starting to tap into that opportunity.
This isn't even to mention the possible impact on the business from improved augmented and virtual reality headsets and glasses. These emerging technologies could unlock a number of growth markets for Matterport that tap into its existing asset base.
A growth stock for the next decade
The digitization of real estate assets is just getting started and Matterport is already an industry leader. The company's technology is not only powerful, it's also easy to use and has clear value for those using it.
I don't know if Matterport will hit any of the projections it laid out in a presentation to investors, like $747 million in revenue and 73% gross margin in 2025, up from an estimated $86 million in revenue for 2020 and a 56% gross margin. Even if it doesn't hit those numbers, I think the company has the potential to be a very high-growth stock with a massive market to grow into. For long-term investors, this is the kind of company that could be the best stock of the next decade.