Shares of Matterport (NASDAQ:MTTR) have started 2022 with a very negative performance. MTTR stock has already lost over 40% year to date, closing at $12.89 on Jan. 19. Such a big loss in such a short time — less than a month — signals negative momentum for the technology company.

Back in December 2021, my first article on MTTR stock, “Don’t Buy Matterport Stock Until It Turns Potential Into Profit,” concluded that “Matterport needs to deliver results before it’s a good investment. Keep an eye on this spatial data company, but simply ask this. If the market potential is as big as the company claims, then revenue growth and profitability will arrive soon.”

I stated my thesis on the company from the first moment, stating “Matterport’s ‘digital twins’ are exciting but wait for profits before jumping in.” Now, one and a half months later, has anything material changed to make me consider the selloff a buying opportunity? I do not think so. Earnings will be a catalyst, but we don’t expect them until early March.

So what could make investors stop the selling pressure in this spatial data company?

To start, an analysis of key highlights from its Analyst Meeting back in mid-2021 can shed more light on the business plan and economic moat of the firm.

Matterport: Transforming Digital Twin into Business

What is a digital twin? According to Matterport it’s a “digital copy of a real-world place or object.” These digital counterparts leverage modern technology including advances in machine learning and AI to make “dimensionally accurate 3D digital models that can be updated quickly to reflect changes with its physical counterpart.”

The real place can be anything — a building or even an outdoor space. The disruption of several industries such as real estate, hospitality, construction and insurance is made by allowing for better communication between businesses and their customers and vendors.

The use of AI and deep learning not only makes use of sophisticated and advanced technology but can add practicality in the era of coronavirus. Need to visit an apartment you’re thinking about buying but you are worried about traveling in person amid the Omicron variant? No problem. The seller can send you the details for a 3D virtual tour to have a look. This adds a lot of utility to the Matterport platform.

Online shopping and retail businesses can also benefit from adapting to consumers’ habits by creating a 3D store. A new way for customers to shop online as the metaverse looms on the horizon.

MTTR Stock Marketing Highlights

The company faces a $240 billion global total addressable market opportunity as properties go online. If MTTR manages 1% penetration of this huge market, it could mean annual recurring revenue of $2.4 billion. At 5% penetration, annual recurring revenue could grow to $12 billion. The projections get even better at subscriptions of $5 per month, which would turn 20 billion spaces with either 1% or 5% penetration to annual recurring revenue of $12 billion or $60 billion respectively.

The total addressable market of the top 10 markets is a 10 billion space opportunity to explore and monetize. This market includes countries such as the U.S., Canada, UK, Germany, France, China and India.

Multiple channels can support continued growth, from the SaaS business model generating revenue from subscriptions on smartphones, to scaling enterprise applications, pursuing an international expansion, and developing an active 3rd party application marketplace.

Matterport reported that less than 10% of its total revenue was derived from top 10 customers, which is important. You don’t want to have a business built based on only a few material clients. That makes the business model too dependent on them and too risky.

The financial performance of Matterport is very weak as the company is unprofitable and burning cash. Upcoming earnings should be important, and could signal either a rebound of the stock price or a continuation of the slide.

The potential for MTTR stock exists and is huge. But my previous article’s conclusion remains valid. Wait for improved key metrics to show traction in the business and that the digital twin concept has momentum. Now it is too risky and mostly unjustified to jump in trying to catch the bottoming of the stock price.

On the date of publication, Stavros Georgiadis, CFA  did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. He focuses on U.S. stocks and has his own stock market blog at thestockmarketontheinternet.com/. He has written in the past various articles for other publications and can be reached on Twitter and on LinkedIn.