Matterport, a digital twin platform, has agreed to be acquired by its customer, Costar, in a cash-and-stock deal valued at $5.50 per share, giving it an enterprise valuation of $1.6 billion. Matterport’s technology helps companies create digital replicas of physical spaces.
Costar’s offer represents a premium of 212% over Matterport’s last closing share price prior to the announcement on April 22.
For Matterport, the deal comes as a welcome development after struggling to meet investor expectations for subscriber growth amid a slow real estate market and wider macroeconomic challenges. The company’s stock had been trading below $2 per share before the acquisition was revealed.
Despite efforts to improve profitability in 2023, investors remained dissatisfied with Matterport, especially after its public listing via a SPAC deal in 2021. The deal valued Matterport at around $2.9 billion according to Bloomberg.
On the day of the announcement, Matterport’s shares were trading slightly below the $5.50 deal price, indicating investor caution possibly due to regulatory concerns or potential fluctuations in Costar’s stock, as the deal includes a share-based component. In contrast, Costar’s shares saw a slight increase post-announcement, highlighting investor confidence in the deal’s benefits.
Established in 2011, Matterport gained prominence by creating 3D imaging cameras and transitioning from the Microsoft Kinect hacker scene to joining Y Combinator’s Winter 2012 batch. Despite competition from other platforms like Cupix, Giraffe360, and Zillow 3D Home, Matterport’s services found significant traction in the real estate sector.
Demand for digital twin technology, particularly in the real estate industry, surged during the pandemic as virtual tours replaced traditional viewings. Matterport’s strategic decisions, such as enabling smartphone-based virtual tours and integrating AI with its Cortex solution, further differentiated its offerings and enhanced its value proposition.
Under the leadership of CEO RJ Pittman since 2018, Matterport secured $409 million in funding over its first decade before going public in 2021.
Costar’s founder and CEO, Andy Florance, emphasized the alignment of both companies’ missions to digitize the real estate world in a statement following the acquisition announcement.
With a market cap of $34.84 billion, CoStar Group operates popular marketplaces like Apartments.com, Homes.com, and LoopNet, providing valuable insights into the potential synergies between Costar and Matterport for their users.
Matterport’s technology has already shown its value on Apartments.com, with over 7.4 million Matterport 3D Tours views and increased consumer engagement. Costar plans to integrate Matterport’s virtual tours on Homes.com in the future.
Looking ahead, Florance anticipates that incorporating Matterport’s technology will enhance the home buying experience by allowing buyers to visualize properties with their own furnishings, creating additional value for agents and promoting their brands.
Beyond the real estate sector, the impact of the acquisition on Matterport’s partnerships, such as the collaboration with Facebook to support researchers in training robots in virtual environments, remains to be seen.
While the deal is subject to regulatory approvals, past challenges like Costar’s failed attempt to acquire RentPath in 2020 show potential hurdles in finalizing such acquisitions. It will be essential to monitor how the deal progresses in the coming months.
