Digital twin platform Matterport has agreed to be acquired by one of its customers, Costar, in a cash and stock deal of $5.50 per share, valuing the company at approximately $1.6 billion. Matterport's technology helps businesses create digital replicas of their physical spaces.
KoStar's offer represents a whopping 212% premium over Matterport's last closing share price before the acquisition was announced on April 22nd.
For Matterport, the stock has remained below $5 since August 2022 as it struggles to meet investor expectations for subscriber growth amid a downturn in the real estate market and broader macroeconomic slowdown. The deal appears to be a blessing in disguise for Matterport, which was traded. Before the deal was disclosed, Matterport's stock was trading below $2 per share.
According to its 2023 financial statements, the company has been working to improve its profitability over the past year. But investors aren't happy with the company, and the stock has languished since going public via a SPAC deal in 2021, with Bloomberg reporting Matterport's valuation at about $2.9 billion.
Matterport stock was trading at $4.76 before the bell on Tuesday, just below the trading price of $5.50, likely due to investors wary of the deal being blocked by regulators. Alternatively, it could indicate that they may be hedging their bets against the possibility of a decline in Coster's stock. That's because the deal also includes an equity-based component. However, CoStar's stock price has risen slightly since the announcement, indicating investors are satisfied with the potential benefits of the deal.
Founded in 2011, Matterport quickly rose to fame, making 3D imaging cameras, emerging from the Microsoft Kinect hacker scene, and joining Y Combinator's Winter 2012 batch. Its services gained significant traction in the real estate sector despite competition from alternative services such as Cupix, Giraffe360, and Zillow 3D Home.
Digital twin technology has applications in construction technology and insurtech, but demand from real estate stakeholders is particularly evident as the pandemic accelerated the switch from in-person viewings to virtual tours in both commercial and residential real estate. is.
First-mover advantage aside, companies' subsequent decisions may have played an equally important role as the market evolved. Its business has been diverse, including helping customers create virtual tours even on their smartphones. Additionally, by adding AI to our in-house solution, Cortex, we have further differentiated our services by leveraging that data to generate a 3D digital twin that supports additional labels such as property dimensions. .
Matterport's leadership has changed over the years. His current CEO, former eBay chief product officer RJ Pittman, took the helm in 2018, and the fundraising trajectory has been pretty smooth. It raised a total of $409 million consecutively in its first 10 years and opened to the public in 2021.
“Costar Group and Matterport have nearly identical mission statements: digitizing the world's real estate,” Costar founder and CEO Andy Florance said in a statement.
CoStar is a real estate giant with a market capitalization of $34.84 billion and operates marketplaces such as Apartments.com, Homes.com, and LoopNet (commercial real estate). This gives you direct insight into the value Matterport can add to your end users.
In March 2024, Koster said in a press release that “Matterport 3D tours on Apartments.com have been viewed over 7.4 million times, and when Matterports became available, consumers 20% more time. The company now plans to incorporate Matterport's virtual tours (“Matterports”) into his Homes.com.
According to reports, Florence, who took to the stage at a real estate event shortly after the announcement, said that brokers can offer more value by, for example, allowing homebuyers to view their own furnished properties. He said he would be able to promote the brand.
It will be worth tracking what happens to Matterport's activities outside of real estate, such as its partnership with Facebook to help researchers train robots in virtual environments.
The deal requires regulatory approval, but it's more than just an asterisk. Costar's attempt to acquire RentPath in 2020 was derailed by an FTC antitrust lawsuit, and RentPath was instead acquired by Redfin in 2021.