Bitcoin price – 1 Recent Tech IPO to Put on Your Radar
Property technology company Latch (NASDAQ: LTCH) recently went public via a special purpose acquisition company (SPAC) merger, and quite frankly, some people are apprehensive about investing in a company with a $1.7 billion market cap that did just $6.6 million in revenue last quarter. However, in this Fintech Zoom Live clip, recorded on June 10, Fintech Zoom contributors Matt Frankel, CFP, and Brian Withers discuss why Latch could be such a tremendous opportunity as commercial real estate upgrades to 21st century technology.
10 stocks we like better than Latch, Inc.
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Fintech Zoom Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now… and Latch, Inc. wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 7, 2021
Matt Frankel: Latch’s market cap is about $1.7 billion at the current market cap. Just to give you a little rundown of the business, the name Latch comes from locks, like latches on a building. Latch is a smart home technology company. They work on both sides of the business, hardware and software. Their core product is what they call a whole building operating system for apartment buildings, things like that. They partner with companies like AvalonBay (NYSE: AVB), which is one of the biggest apartment real estate companies in the country. The fact that they have proprietary hardware that works with their operating system, they make their own smart locks, for example. The fact that they have their own proprietary hardware makes customer retention much better than it otherwise would’ve been. There are other players in the smart home space that have operating systems for buildings, but they’ll integrate with stuff made by Ring, they’ll integrate with stuff made by Nest. All these other smart home technology companies. Latch’s systems work with Latch’s products, which makes customer retention better. Since 2014, Latch has not churned the customer. That’s a pretty impressive statistic. They have over 368,000 apartment units on its platform right now, and they have not churned the customer, that’s pretty impressive. They are expanding their company into Europe and office buildings right now. The reason they are able to do that is because they just completed a SPAC merger because it’s 2021, why not? We’re going public through SPAC. They got about $450 million in cash by going public through SPAC. Some of that was from the SPAC itself, some of that was from a PIPE which is the funding round that usually happen with SPACs. Latch’s PIPE was led by Chamath Palihapitiya, his job is to promote his investments a little bit. But he called Latch the best Software-as-a-Service company he’s ever seen. That’s pretty high praise from a well-respected investor. It’s a small company right now by revenue, they did $6.6 million of revenue, not billion, million, in the most recent quarter. That doesn’t tell the whole story. The number you want to look is bookings. Latch books customers while the building is being built. For example, a high-rise apartment building might take two years from planning till when people are moving in. Latch will book a customer at the time it’s in the planning phase. Won’t actually start getting revenue until people start moving in two years later or however long it takes. Bookings tells you how much they’re doing. Latch booked $71 million of revenue in the most recent quarter, which is a much more palatable number. That’s what tells really the full story. It sees a $54 billion market opportunity in the building operating system market in the United States alone. Renting is a lot more common in Europe than here, they see a $90 billion market opportunity just expanding. I had CEO, Luke Schoenfelder on Industry Focus not long ago. He is a former Apple (NASDAQ: AAPL) executive. I don’t about you Brian, but I’ve listened to probably 1,000 CEO interviews in my time. A lot of them are great. They know their numbers, they know what they’re going to do in the businesses, they know what should grow revenue. Then you have some CEOs where you just get that vibe that the company is their baby, that they are all in on this, and that’s the vibe you get when you’re talking to Latch’s management team. That’s an intangible factor that really is important when you’re looking at investments. Have you looked at Latch at all Brian?
Brian Withers: Yeah. I got introduced when we did the Chamath Show and we covered all of the 14 different PIPEs and SPACs that he had on the burner, and Latch was one of my favorite of those 14. I really liked the recurring revenue stream, I really liked the predictability of revenue. When they book stuff in advance, that’s tremendous visibility, and then they are able smartly control their spending and how they’re investing. They are tremendously innovative. The batteries on their locks, I think last two or three years. It’s amazing some of the technology if you look into it.
Brian Withers has no position in any of the stocks mentioned. Matthew Frankel, CFP owns shares of Apple and Latch, Inc. The Fintech Zoom owns shares of and recommends Apple. The Fintech Zoom recommends AvalonBay Communities and Latch, Inc. and recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Fintech Zoom has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.