I’m back! Your friendly neighborhood Gumshoe has returned from an extended road trip with Mrs. Gumshoe and the little Gumshoes (who aren’t so little anymore, part of the reason for our trip was visiting colleges for our oldest), and I’m trying to catch up with a giant pile of correspondence and decide which new super-secret teaser picks we’ll detangle next… if I missed your notes or comments over the past couple weeks, well, sorry — I can’t get to them all, but we’ll do what we can.
And the one that floated to the top of the overflow pond this morning was from the Riskhedge folks, an ad that teased one of the stocks they’re recommending for “Hypergrowth America” — so what might we give the Thinkolator to chew on after a long layoff?
The pitch is for Stephen McBride and Justin Spittler’s Disruption Trader, which is one of their “upgrade” newsletters (“on sale” for $2,000/yr), and the ad is basically a trade recommendation with the name of the company blacked out… here’s a little taste:
“Buy XXX Today….
“XXX is turnign the entire $230 trillion is turning the entire $230 trillion global real estate market on its head by revolutionizing the way people think about property.
“Specifically, the company is leading the digitization of real estate layouts…”
And apparently this is one of those “pre-IPO” companies, a private company that’s in the process of going public through a merger with a Special Purpose Acquisition Company (SPAC)… we get these hints about that:
“This deal is expected to close before the end of this quarter. Upon completion of the reverse merger, XXXX will trade on the Nasdaq exchange under the ticker XXX.”
OK, so… real estate digitization, a Nasdaq-listed SPAC, and we also get a little sample stock chart of the SPAC that indicates it soared to the high $20-s in the February SPAC-mania, perhaps when the deal was announced or just because all SPACs were soaring at the time, and that it cratered out around $111 in mid-May and was priced around $14 on June 21. So those are some more clues.
What else? Just that they were saying on Sunday that it’s a buy at “current market prices” and they’ll go into it in more detail later.
So what’s the stock? Thinkolator sez this is a company I’ve mentioned briefly in the past, Matterport, which is in the process of going public with a SPAC called Gores Holdings VI (GHVI), assuming the shareholders vote in favor next week (as investors clearly assume they will — if investors hated the deal, it would be trading much closer to the SPAC’s cash value of roughly $10 per share, but Matterport’s ongoing updates and presentations about the growth of the business in the past few months have the shares at about $14.50 today).
Matterport is a company that does 3D digitization of physical spaces, using 3D camera capture technology and their own software platform to create “digital twins” for properties and therefore support all aspects of property management, from promoting sales or leases with brokers and property owners to managing physical spaces and visualizing potential improvements or dealing with insurance or restoration. This isn’t a segment that they “own”, there are lots of companies who sell 3D cameras and digitization tools and help to create “digital twins” of physical spaces, and this is a young industry so it’s tough to tell who might have a real competitive advantage or edge, particularly with technology changing fast, but they seem to me to be an early leader — and they certainly believe themselves to be the leader, with a large data library (more than 15 billion square feet captured) that is growing fast and a breakthrough technology that they say allows them to build simple iPhone image capture into their digital models. Their latest analyst presentation, from a few weeks ago, draws a picture of a small leader in what might potentially become a huge market.
I can’t really say with confidence that Matterport will win this race, there are a lot of real estate data companies, but they do have a nice integrated model with both hardware and data processing and management, and they offer a freemium service to property owners and real estate brokers that makes it easier to get in the door and build up, with high-margin SaaS memberships for power users.
As with all SPACs, the valuation is mostly based on projections of continuing fantastic growth over the next five years and the 2025 numbers tend to be highlighted — they expect a compound annual growth rate in revenue of 59% from 2019 to 2025, and a gross margin that will go from about 55% right now to the low 70s over the next few years, a nice appealing subscription software/data platform if they can really grow in that way.
And so far,