Metaverse Play Matterport Has Too Many Red Flags for Investors

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problem (NASDAQ:MTTR) provided some strong growth metrics in the last quarter. Nonetheless, given the valuation of MTTR’s stock — which remains fairly high despite its recent retreat — the gains in the company’s earnings have not been particularly impressive.

Even more disappointing is the company’s 2022 guidance, which suggests Matterport’s growth will be very sluggish this year. Given these points, I believe that Matterport is starting to face stiff competition and there may not be as much demand for its products as those optimistic about MTTR shares believe.

Some Strong Growth Metrics for MTTR Saham Stocks

In Q4, after the debut of the Matterport app on Android, it was downloaded more than 200,000 times from the Android app store. Also last quarter, Matterport’s subscription revenue jumped 32% year-on-year to a record $16.5 million.

In addition, the company’s Q4 “net dollar expansion rate” reached an impressive 110%, indicating that current customers are happy with its products. According to the company, “Quarterly Net Dollar Expansion Rate compares revenue from active customer accounts in a given quarter, excluding variable revenue, with revenue generated in the same quarter one year later by the same account.”

Also very impressive was the Q4 service revenue surge of 69% YOY, which was $3.7 million. Encouragingly, the increase shows that Matterport’s customers are using its products in a big way, while Matterport’s Services revenue is well positioned to rise further.

Disappointing Top-Line Growth and Guidance

Matterport Q4 revenue increased just 15% YOY to $27.1 million. At the midpoint of its Q1 sales guidance range of $25.5 million to $27.5 million, its revenue would actually be down 2% YOY.

The company generated $111 million in revenue in 2021. For all of 2022, at the midpoint of Matterport’s $125 million to $135 million top-line guide, the company’s sales will increase by only 17% YOY.

The Q1 guide is definitely not very impressive and is a red flag for MTTR stocks.

Of course, YOY earnings growth at the mid-teens percentage rate isn’t particularly impressive for an unprofitable company whose stock trades at a forward-looking price-sales ratio, based on analysts’ 2023 median earnings forecast, of roughly nine times.

And, given the stock’s valuation, Matterport’s Q1 guidance is quite worrying.

What’s Behind Matterport’s Disappointing Growth and Guidance?

Matterport cited changing deals with “big companies” to subscription payments, rather than licensing deals, along with supply chain issues as two factors that slowed its revenue growth in the last quarter. Those issues clearly had a negative impact on Q4 earnings to some extent. And, to some extent, the company’s weak guidelines can be caused by the company’s belief that it will face similar problems in the future.

However, many other companies have managed to grow revenue at a much greater rate than Matterport despite supply chain issues. As a result, I highly doubt whether Matterport’s moderately sluggish Q4 revenue growth and weak sales guidance was caused entirely or even primarily by supply chain and timing issues.

On the other hand, I believe that the competition and demand issues I raised in the previous column have a significant role in depressing the company’s Q1 revenue growth and 2022 sales prospects. More specifically, as I noted in a previous article on MTTR shares, “160+ companies have involved in the metaverse. It’s a good bet that dozens of these companies will become direct competitors to Matterport by helping businesses leverage the metaverse to generate sales.”

In addition, I pointed out that the company had been working on the metaverse for decades, but had never generated a large number of sales. As a result, I believe that their bullish forecast on MTTR stocks for a sudden spike in spending on the metaverse could be wrong. Indeed, Matterport’s Q4 results and guidance provide evidence to support that conclusion.

Bottom line on MTTR Saham Stocks

Matterport posted some impressive Q4 growth metrics, but overall revenue growth wasn’t all that impressive, and its earnings guidance was very disappointing. I believe that the results and guidance, taken as a whole, show that the company’s fundamentals are not very strong.

Therefore, I advise investors to sell MTTR shares.

As of the date of publication, Larry Ramer does not hold (either directly or indirectly) any position in the securities referred to in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publishing Guidelines.

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