Matterport (MTTR 2.12%) shareholders lost ground to the market last month as the stock fell 36%, compared to a 4% spike in the S&P 500, according to data provided by S&P Global Market Intelligence. That slump wasn't enough to derail wider returns for investors in the metaverse specialist, though. The stock still trounced the market since going public in mid-2021.
December's stock-price decline was powered by shifting investor sentiment around the short-term prospects for Matterport, which may still be several years away from producing earnings in keeping with its large market capitalization.
The stock was caught in a wider drawdown last month that pinched many high-growth companies. Declines were especially pronounced in cases like Matterport's, where the share price had spiked earlier in the year. Shareholders ended 2021 with over 90% returns, even after the 36% slide to end the year.
Head-turning price swings are to be expected in a volatile stock like this -- especially since Matterport is still working to deliver sustainable sales and profit growth. Sales in the most recent quarter were up 10% to just $28 million, in fact, and losses were over $160 million. Matterport, which aims to help clients bring their physical spaces into the virtual world, counts very little revenue today, given that the business is currently valued at nearly $5 billion.
Investors are hoping that the business will quickly grow into the high valuation that Wall Street has placed on the stock. Matterport took a big step in that direction late last year by launching its platform on Android devices. The move "dramatically expands our reach for digitizing spaces using just the phone in your pocket," CEO RJ Pittman said in early November.
Even with that push, most investors are expecting Matterport to achieve just $160 million in annual sales this year. While that would translate into nearly 50% growth, year over year, it would still leave the stock's valuation stretched.
Matterport is currently fetching a price-to-sales ratio of more than 30. That's double the valuation of established software-giant Microsoft, for context, and roughly the same price that investors are paying for shares of Nvidia, which counts over $24 billion in annual sales.
Matterport might eventually earn that premium valuation. But in the meantime, shareholders should count on more volatility, with price swings in both directions, for this growth stock.