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This Exciting IPO Stock Has a $240 Billion Market Opportunity

We've seen quite a few property technology, or PropTech, companies go public over the past year or so, but one that has a particularly interesting market opportunity is Matterport (NASDAQ: MTTR). In this Fool Live video clip, recorded on Sept. 10, Fool.com contributors Matt Frankel, CFP, and Lou Whiteman discuss Matterport's business and growth potential.

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Matt Frankel: It's called Matterport. Ticker symbol is MTTR, recently went public via SPAC merger because it's 2021, why not?

Lou Whiteman: Of course.

Frankel: Matterport, like you said, I always think of the Disneyland ride Matterhorn when I hear the name. This is what they call a spatial data company. Matterport is the best in the business when it comes to technology that can create a 3D map of the inside of a building. For example, they partner with Redfin (NASDAQ: RDFN) to provide 3D tours for their listings, Airbnb (NASDAQ: ABNB) to provide insight views of properties for them. So Matterport is pretty much the pioneer in this market. They'll say they have over 100 times the market share of all their competitors combined, and it's true, but it's because they don't really have any competitors.

Whiteman: Percentage gain, yeah.

Frankel: But Matterport does have some hardware. They have a 3D mapping camera that's the best you're going to find. It's like a $3,000 camera, the Matterport Pro2 it's called. But the real potential in this business is they sell it as a Software-as-a-Service model. The idea is the more buildings around the world they can have 3D maps or digital twins as they call them, the more valuable this becomes the software product. How big could this get? The company has mapped about 15 billion square feet of space so far. That includes homes, offices, commercial properties. They have about 250,000 subscribers, 150 companies around the world. That is 18 times as many as they did two years ago. Growing very, very fast, this is really catching on. A lot of Fortune 500 companies are Matterport users. They don't all pay for it. There's a free version, it's a freemium model. So if you just want to be able to look inside one building, that's a free membership. 3D maps of homes are just one use case for this. Because you might be asking, why would I pay for that when I can just go to Redfin or go to Airbnb or go to Zillow and see the inside of the home I want to see if there's already a Matterport map of it? That's only one use case. Where Matterport really has potential, it's things like helping developers renovate a property without ever having to go in it, figuring out the most efficient use of space without having to be there. If you're an interior decorator, there's only so much you can do if you walk in and take a picture of someone's living room. Having a 3D map, it's essentially like being there. It takes your business to another level. Contractors is a big one. Insurance companies. How much of an advantage would a company have underwriting a property if you could see every little nook and cranny on the inside of it? A lot of potential here. Matterport's growing really, really fast. Founded by former Google (NASDAQ: GOOGL)(NASDAQ: GOOG) executives, former Apple (NASDAQ: AAPL) executives, former Chief Product Officer of eBay (NASDAQ: EBAY) is one of their executives. Really, really big market. Like most SPAC IPOs, take their addressable market with a big grain of salt. Let me see if I have the number in front of me. It's, let's say, a reach. They're saying that they have a $1.2 trillion addressable market. That seems a little bit of a reach. They arrived at it this way. There's an estimated 4 billion properties worldwide. Throughout the world, 4 billion buildings. Almost one for every person. Less than 1% of it has been digitized on the inside. Even less has been digitized to the quality of Matterport's standards. They're saying that just with its current business, not including any adjacent opportunities, that's a $240 billion addressable market if they can map 100% of the world's buildings. They're not going to get there.

Whiteman: No.

Frankel: It's just not going to happen.

Whiteman: Yeah.

Frankel: But if they can get 1% of their addressable market opportunity, that's a $2.4 billion revenue opportunity. That's a pretty big deal for a company of that size. Really interesting business, new technology. What do you think?

Whiteman: Well, there's no reason why all of the world's buildings, especially with the pay to do this, there is certainly that 1% number. There is good reason why some business is worth. It's funny, when I first saw them come out as a SPAC, all I could think of was when we renovated our kitchen and how much I would've paid, if not the contractor paid, to just have someone to come in, do that and show us what we could do and all. I think the construction applications, maybe on small-scale, but there's a lot of incremental small revenue to be made there. This is in a way the biggest company we're talking about and in a way the smallest because their market cap, I guess it's a little shy of Howard Hughes (NYSE: HHC), but their annualized revenue run rate is just north of $100 million. This is early days.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Lou Whiteman owns shares of Redfin and The Howard Hughes Corporation. Matthew Frankel, CFP owns shares of Apple and The Howard Hughes Corporation and has the following options: short November 2021 $140 calls on Apple. The Motley Fool owns shares of and recommends Airbnb, Inc., Alphabet (A shares), Alphabet (C shares), Apple, Matterport, Inc., Redfin, and The Howard Hughes Corporation. The Motley Fool recommends eBay and recommends the following options: long March 2023 $120 calls on Apple, short March 2023 $130 calls on Apple, short October 2021 $70 calls on eBay, and short September 2021 $65 calls on Redfin. The Motley Fool has a disclosure policy.


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