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1 Proptech Stock With a Massive Growth Opportunity

By Matthew Frankel, CFP® – Aug 27, 2021 at 6:41AM

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This stock just went public and could become a much larger company in the years to come.

Spacial data technology company Matterport (MTTR -3.54%) recently went public via a merger with a special purpose acquisition company, and with a market cap of $3.5 billion is a relatively small company right now. But in this Fool Live video clip, recorded on Aug. 17, Millionacres real estate analyst Matt Frankel, CFP, and editor Deidre Woollard discuss why Matterport could get much larger in the years ahead.

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Deidre Woollard: "Among the real estate stocks I'm following MTTR has started trending positively among the advisors I'm following. Any ideas why? Buy more now?" MTTR is the new ticker for Matterport, which came to market via SPAC. Matterport is one that I've been following for a while because I used to work in residential real estate and that was the default virtual tour. Matterport cameras were a very big part of that. I'm more interested in what that company can do with digital twins, building information modeling, I feel like there's massive potential in that. What are you thinking about Matterport?

Matthew Frankel: There are a lot of applications. In addition to what you mentioned, construction applications. If I want to get my house renovated, a 3D digital map would be so much better than anything else available today. Matterport really has the technology advantage and the first-mover advantage over everyone else. I was reading their latest presentation, they have 100 times more digital maps of buildings than the rest of the industry combined in their database. That's a pretty big first-mover advantage. Now that's not to say that there won't be competitors creeping up. It's a technology that can be built out by some of these deep-pocketed tech competitors. No one has their kind of first-mover advantage or data advantage. Remember they sell their product as a software primarily. They have hardware, they sell cameras and things like that. They're primarily a software company and they sell it on a subscription basis. As their library of spatial data grows, the more valuable those subscriptions become, and even if, say, Google wanted to invest billions of dollars to build out the technology, it's a pretty big head start that they have with their giant library of spatial data. I think now that they are public and you really seeing real earnings results. If you remember when a SPAC merger is announced, it's pretty much based on future projections for the next five years or so, which are pretty generous, let's just put it mildly. In a lot of cases and now that you're seeing actual results and you're seeing Matterport actually deliver 100% year-over-year growth or whatever the number was, it was really impressive last quarter. Now that you're seeing actual results from them, I think you're seeing analysts start to take notice more.

Woollard: I think one of the things about Matterport versus some of the other SPACs, is this was an existing company with an existing revenue stream. I think one of the things that I like about them, in particular, is I like the way that they have a couple of different things going on where they can use some of the revenue that they're getting from the residential real estate where they really, really dominate to fuel some of the places where they actually might see more growth. I find it interesting that even though Zillow has a, it's a decent 3D app, the adoption of it has been relatively low because Matterport really has that brand advantage in the virtual space in residential and I think is starting to get that brand advantage in commercial. Talking about that spatial data, I mean, when you get to critical mass on that, I mean, what you can do with that and the kinds of applications for smart homes, for green building and creating more efficient use of spaces is just tremendous.

Frankel: Their technology is just ahead of everyone else's right now, plain and simple. Their cameras, which I think are in the $3,000 ballpark, are the best 3D mapping cameras you could buy. You mentioned their virtual tour technology. There is a reason that they're like the go-to for virtual tours it's because it's not just the brand name. A lot of people haven't heard of Matterport that are listening to this show right now.

Woollard: True. But they've probably seen one on Realtor.com or Zillow.

Frankel: But they've probably seen the product. They're probably familiar with the product just because it's the best at what it does and plain and simple and they claim up really gigantic market opportunity. I want to say it's in hundreds of billions of dollars, which they're not going to get there. But they say, even if they can map something like 1% of the properties in the world, it would be a pretty big achievement and would grow their revenue tremendously. I have a positive outlook on that one in the years ahead. It's on my watch list, I don't own it yet.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Matthew Frankel, CFP owns shares of Zillow Group (C shares). The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Matterport, Inc., Zillow Group (A shares), and Zillow Group (C shares). The Motley Fool has a disclosure policy.

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Stocks Mentioned

Matterport, Inc. Stock Quote
Matterport, Inc.
MTTR
$3.00 (-3.54%) $0.11
Alphabet (A shares) Stock Quote
Alphabet (A shares)
GOOGL
$95.19 (-0.90%) $0.86
Zillow Group (A shares) Stock Quote
Zillow Group (A shares)
ZG
$34.81 (0.06%) $0.02
Alphabet (C shares) Stock Quote
Alphabet (C shares)
GOOG
$95.44 (-0.84%) $0.81
Zillow Group (C shares) Stock Quote
Zillow Group (C shares)
Z
$35.31 (0.06%) $0.02

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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