Nothing changes people’s opinion of a company faster than its stock price. When a company’s share price is going up, traders assume its underlying business must be doing well. And when a firm’s stock tanks, folks assume that its underlying business is rotten as well. Matterport (NASDAQ:MTTR) is an example of that tendency. MTTR stock has plunged about 70% in a matter of weeks, bringing the bears out of hibernation.

In November, social media users praised Matterport’s digital realty and images business. The company also looked poised to benefit from the rise of the metaverse.

Fast forward two months, and social media is now calling Matterport a “pump-and-dump” scheme and a glorified penny stock. Was Matterport’s whole story simply a façade?

Investors should always be skeptical about special purpose acquisition companies (SPACs). That said, there’s little reason to believe that Matterport was just another defective SPAC from the start. Here’s why the bears are wrong.

Matterport Is Bringing 3D Imaging Technology to a Mass Market

Some of the confusion around Matterport seems to stem from its business model. It does not have the simplest businesses, and many people get confused about them.

First of all, Matterport sells customers high-end digital cameras for at least a few thousand dollars each. These cameras don’t generate meaningful profits for Matterport, though; as is usually the case for tech firms, most of its  profits come from software, not hardware.

So how can Matterport  monetize its offerings? And what do its cameras do? The devices allow property owners to photograph the interior of their buildings and make a life-like 3D model of them using Matterport’s tools.

With those models, they can do a variety of cool things. For example, they can show office space to potential tenants virtually and  enable potential clients in a different state or country to see  a hotel or event venue  without visiting it .And the 3D models can be used to try different experiments, such as remodeling a retail space without having to disrupt the business.

That’s not all. Once a property is loaded into Matterport’s software, the company sells additional services. And going forward, as the metaverse takes off, there should be ways to use Matterport’s lifelike 3D representations of real world interiors for games, art, and other  purposes.

Bears Poke Holes in Matterport’s Outlook

When MTTR stock was trading for around $30, it appeared that the bulls were in full control of it. However, Matterport has lost more than two-thirds of its value over the past two months. That sort of crazy price action caused people to reevaluate the narrative about the company. Now everyone is listening to the bears.

The bears are saying that most of the rally of Matterport’s shares was triggered  by a marketing glitz rather than any true substance. They say that Matterport’s software is not that sophisticated, while the software’s output is more of a gimmick than a game-changer.

Certainly, after viewing the demo videos for the metaverse products of other companies, it’s not hard to get the sense that the hype of the metaverse may be ahead of its reality for the time being. Whether that applies to Matterport remains to be seen, but with the stock slightly above $9, many major investors certainly have their doubts.

Adding to that, Matterport generates a surprisingly small amount of revenue right now. Indeed, even after the stock’s recent crash, it’s still changing hands for more than 20 times its revenues. That is, to put it kindly, not a bargain.

The Truth Seems to be Somewhere in the Middle

Is Matterport everything the bulls said it was? Probably not. It’s unlikely that a large portion of real estate professionals will utilize Matterport’s virtual tours in the near future. Similarly, it will take years for  the company to generate any serious revenue from the metaverse. That won’t happen in 2022 or 2023.

Some specific complaints about Matterport also appear to hold water. For example, reportedly its cameras don’t handle bright light too well and , as a result, they struggle in outdoor settings. That limits the company’s potential market somewhat, but it hardly proves that the product doesn’t perform well in normal interior settings. And Matterport could keep improving its cameras.

It’s also worth highlighting that Matterport has changed its sales model. It used to sell much of its offering in exchange for a one-time licensing fee,  but now it is charging subscription fees.

The change will lower its revenue in the near-term,  but  will lead to  more stable and ultimately larger sales. The firm’s lower-than-expected revenue growth, which has resulted in some criticism of the company, seems to be tied to this strategy.

The Verdict on MTTR Stock

Matterport ‘s shares certainly rose too high at the end of last year. I was bullish on the shares when they were still trading around $10, but I slammed the brakes on my enthusiasm when the shares reached a much higher price. With a growth stock such as Matterport, it rarely pays to chase the shares up to new highs. Instead, it’s better to wait for a steep correction before taking a bullish position in them.

Matterport’s current correction certainly counts as steep. With the shares down about 70% from  the levels they reached just two months ago, if you ever wanted to buy MTTR stock, this is the time to do so.

To be fair, the bears have made some valid points about Matterport. But they’ve hardly proven that the firm’s whole business model is deeply flawed.

I’d argue that people are focusing on negative talking points about the company way too much  because its stock price has gotten hammered. When tech stocks pick back up, however, expect traders to give Matterport a fresh look, leading to a sharp relief rally.

On the date of publication, Ian Bezek 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.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a sizable New York City-based hedge fund. You can reach him on Twitter at @irbezek.