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Should You Buy Matterport After Its Earnings Beat?

Matterport (NASDAQ:MTTR) reported its second-quarter earnings last week, which came in above
expectations. The data company's adjusted loss per share of $0.12 wasn't as bad as the $0.14 loss
analysts were projecting.

The company's subscription revenue rose by 20% and service revenue climbed by 74% year over year.
The results were encouraging and management even announced an increase to its guidance, now
expecting to generate between $132 million and $138 million in sales this year. That's up from its
guidance in Q1, which called for between $125 million and $135 million in revenue for 2022.

The tech company's business involves giving users access to spatial data and digital twins of real-world
replicas. It's the type of stock you might own if you were bullish on the metaverse. However, with hype
dying down around that of late, the stock has taken a hit. Year to date, its shares have cratered 71%
while the S&P 500 is down just 10%.

Currently, the stock trades at about 13 times its revenue. Although that's cheaper than the more than 35
times sales it was at early on in the year, it's far from being a bargain. The business is also unprofitable,
with Matterport incurring an operating loss of $69 million this past quarter. Selling, general, and
administrative expenses alone totaled $59 million and were more than its total revenue of $28 million.

Matterport could make for a promising long-term buy, but it may be too early to buy the stock just yet
as its price remains inflated and there's still a lot of risk surrounding its business.