The real estate market is just starting to use technology in a meaningful way, and companies like Matterport -- which is going public through a merger with special purpose acquisition company Gores Holdings VI (GHVI) -- are changing the way that we interact with buildings all over the world. Currently, the company is digitizing real estate layouts with what's known as dollhouse plans (see below), but that could be just the beginning of the company's growth trajectory.
Over the next decade, it may be commonplace to buy a home sight unseen after doing a virtual or augmented reality tour, contractors could bid on projects confidently without ever setting foot in a building, and designers can plan out a building's infrastructure and furniture all on a digital twin of a building. As the center of these innovations, Matterport is one of my top growth stocks for the next decade.
A foundational real estate technology
Making a "dollhouse" digital twin of real estate is great, but it's what developers and customers can do with that asset that could be truly revolutionary. After focusing the last few years on developing underlying capture technology, Matterport is opening up its spatial mapping assets to more devices and developers to build their own tools, and that will help unlock more value.
- Capture: Traditionally done with specialized cameras, Matterport Capture is now available on iPhone and Android phones, opening up a market of billions of smartphones.
- APIs and SDKs: Developers can now use Matterport's APIs and SDKs to integrate the company's library of assets or build new applications and experiences with Matterport Spaces. And management is promising more features will be available as the company grows.
Capturing with Matterport is easy, and companies can use its APIs and SDKs to develop their own use cases with the assets. And the use cases for Matterport are almost limitless.
It's hard to overstate how early Matterport is in its growth cycle. The company estimated it would have a $100 million run rate of revenue by the end of 2020, but that's scratching the surface of what it could generate.
One reason to be excited about the technology is that it's getting easier to capture spaces, as I highlighted above. An iPhone app has been out for a while, but the Android Matterport Capture app was only released in March of 2021. That should greatly expand the company's growth potential, since Android is still the top smartphone operating system globally. And if capture is easy, it opens up a lot of development options for companies to exploit a Matterport.
There are a number of markets that are early in their development at Matterport. Here are five that management has pointed out as big opportunities, and it's easy to see how Matterport assets could be used.
- Real estate: Not only could Matterport be valuable for real estate sales, but it can also be used for interior design and even construction at residential or commercial properties.
- Insurance: Today, insurance companies will at best get images of a home or commercial building before offering pricing. Matterport could improve data flow from customers to insurance companies, reducing the need for in-person visits and potentially helping improve pricing reliability.
- AEC: Architecture, engineering, and construction have been digitized dramatically over the last two decades, but there's still a long way to go to unlock the market's potential. Matterport can make the process of creating a digital twin simple and improve design and contractor bidding at existing buildings. This is a huge market in both residential and commercial real estate that customers and service companies could benefit from.
- Travel and hospitality: Rental properties on Airbnb and VRBO are starting to add Matterports of their properties to give customers a better representation of their space than pictures alone can. We're a long way from Matterport being ubiquitous in those markets, but it could be someday. Add in improved tours of hotels, resorts, event centers, and other travel and hospitality locations and this could be a huge market for Matterport.
- Facilities management: Right now, most information about facilities is housed in 2D drawings that can be impossible to find. Want to know where a pipe runs in the wall of a commercial building? Knocking a hole in the wall may be the only way to find out. Matterport could change that by building a map of facilities and allowing management to pinpoint problems when they occur. This would make maintenance easier and cheaper and improve value for tenants.
These are all huge possible markets, and Matterport is just scratching the surface of their potential. As each one grows, Matterport can grow its asset base and digital footprint.
It's hard to judge what Matterport should be worth as it hits public markets via SPAC merger. The company is estimated to be worth $2.8 billion at the time of the merger, depending on the stock price, and that's a hefty price tag with just $86 million in revenue expected in 2020. But the company is growing quickly, with revenue expected to rise 87% in 2020, 43% in 2021, and 65% in 2022. Take those estimates with a grain of salt, but clearly, this is a company on the upswing in a multi-trillion-dollar real estate market.
Given the potential to disrupt the real estate data market, I think Matterport is worth the risk from an investment standpoint. This is the kind of company that could be commonly used in a number of industries in the future, and that's going to be worth paying a big premium for.