What is the largest asset class in the world? Is it stocks, bonds, currencies or commodities? The answer to the question is not on that list. The largest asset class is real estate, which, from an economical perspective, makes a lot of sense. After all, we all have to eat and sleep somewhere, and that puts real estate as one of, if not the most important asset. We have chamath palihapatiya.

The ceo of social capital has recognized that real estate is undergoing a massive shift, and this, not surprisingly, opens up a huge investment opportunity and no i'm not talking about replacing real estate agents through technological platforms like opendoor, redfin or zillow. I'm talking about the apartment, rental industry, which is an industry so large that the industry is estimated to have 173 billion dollars in revenue every year. In this video, i will cover what company chamath sees as a leader in disrupting the rental space, why he is investing in the stock he has chosen and whether you should look into this investment welcome to cas games academy if you're new to the channel, please consider Subscribing for more content like this and let's get right into it. If you've been watching this channel, you all know, i won't drag you on into the end of the video to mention the stock.

Chamath is investing in chamath recently led the pipe investment in an spac that is merging with a company named latch. The sbsc has not merged with latch quite yet and is currently trading under the ticker symbol. Tsia. Now before you search this stock up or preconceived notions, let me explain why chamath is investing in latch.

He described the stock as the best software as a service company. He's ever seen or invested in and is for few key reasons. The stock has gone under the radar in the public's eye, despite its fast growth, even during the pandemic. Finding and managing tenants is quite troublesome at times.

For example, while looking for tenants real estate managers have to constantly give tours to prospective tenants, this can be extremely time consuming, especially for those that have to manage a large number of real estate. Units latch looks to change this through its lineup of products, its business model, centers around improving the experience of renting and renting out properties and also improving profit margins for real estate managers. In the meantime, latch's most popular product is its rmc series products. The r series product also known as the r reader costs 400 upfront and allows users to unlock their apartment through the latch app an apple watch, a key card or a door code.

This will become extremely important as i'll mention later. The mnc series products serve about the same purpose with each product different depending on the lock of the door. Both of those products are secure door handles that take pictures and videos of those who enter and exit the apartments. The reason why this is extremely important for real estate managers is that when you invite a prospective tenant over, all you have to do is grant access to the latch app for a certain period of time, just schedule the date and time that the prospective tenant is Coming over and enter the prospective tenant's email and they will be given a door code to enter the apartment, this is much more convenient than giving an apartment tour to prospective tenants who might not even be interested in the apartment.

Additionally, real estate managers don't have to keep making new keys every time a new tenant replaces an old one. The reason why real estate managers do this is that keys can be duplicated and old. Tenants may still have access to apartments with the latched door handle real estate. Managers no longer have to spend money doing this.

The reason why latch's business model is so strong is because of its recurring revenue, the price of the m series and the r reader both cost around 400 to install after those two devices are installed. Customers now have to get a software service contract for lashes software, which usually costs around five dollars per door. This is very important for future growth. As of soon explained for the real estate owners using latch makes a lot of sense.

Latch os increases the revenue of apartments by around 200 to 500 dollars per year and reduces expenses by 100 to 300 per year. This is mainly because latch offers a premium. Experience, increases rental fees, offers security and reduces re-keying expenses. With these astonishing numbers, it's almost a no-brainer for apartment owners to use latch owners are beginning to catch on to this, in fact, as of 2019 1 in 10 of all new multi-family apartments built in the u.s was built with latches services.

Latch also has other features in its ecosystem, including the lash intercom, which allows apartment owners to talk to tenants on an intercom and vice versa. The latch camera, which allows property managers to oversee common areas in an apartment building in the latch delivery assistant, which allows large apartments to easily manage incoming packages. These products, along with additional features such as managing thermostats, can all be managed through the latch app latch, also plans to expand into other services on its app, such as insurance and wi-fi management similar to a company like tesla latch's. Software will only continue to get better and better for its customers before we get into latch's rapid expansion.

I have some exciting news for you. Patrons now have access to my exclusive in-depth reports on every move i make in the market. I recently published a page long report on a stock. I've been purchasing over the past couple of days, and all of this is real time.

This is on top of the benefits such as seeing my exclusive portfolio's explanations for each position and obtaining access to my spreadsheet. That helps you evaluate stocks. If that sounds interesting to you or if you're, just curious check out my patreon in the description below now that we understand what latch is, let's take a look at why chamath believes that the business has a huge amount of upside ahead? Latch's growth opportunity is four key pillars backing it up. One, the market for an apartment building operating system is massive, two latches to fill in the vision of the full building technological operating system, three latches, very enticing custom attraction and customer retention, and, lastly, lash has a significant amount of white space for rapid growth.

In other words, latch has lots of room to grow. First, to start with, there were 47 million rental homes in the us, and latch has not even scratched one percent of the multi-family market. Yet this includes 32 million multi-family apartment units in 15 million single family rental units. The market for latches services is in a market worth 54 billion dollars in terms of annual revenue and 90 billion.

If you include europe to emphasize the amount of disruption that still needs to happen, latch's services are currently in 35 states in the u.s and will only continue to expand from there with this much potential. It's no surprise that last has been growing extremely fast. It's booked hardware revenue has increased 413 from 2018 to 2020 and its software revenues increased 546 from 2018 to 2020.. Not only that, but cumulative booked home units are only increasing, faster and faster, as there are now over 300 000 home units that use latch.

What's even more interesting is that latch was able to retain 100 of its customers. So far, as you can see, last has 100 gross revenue retention, which means that not a single customer has downgraded their latch plan. In fact, they actually had their existing customers expand their net books. Revenue expansion was 154, which shows that customers are continuing to use latch's other products.

This fast growth is occurring for a few main reasons. One bookings with new customers only continues to expand. Two existing customers are expanding, three latch software is expanding, which creates additional revenue, and four revenue services are expanding in the last app another major growth driver for latch is the fact that latch plans to accelerate its expansion in europe with his sbac partner, tishman spayer. This is going to be huge for the company.

There are 93 million apartments throughout europe, which leaves a total market size of 90 billion dollars available for latch. The more interesting part is that latch can leverage his partnership with tishman spayer tishman spayer is the company that is leading the space with latch, which means it's in their best interest to use latch's products. Tishman has a huge global portfolio of apartments. The latch will expand into this includes 56.8 billion dollars with the global assets and 80 million square feet of space.

Expanding latch into these apartments is practically easy money, given that it's in tishman's best interest to do so now that we know that latch is growing fast and that its business model is solid, we need to take a look at its valuation in the future. Latch is expected to grow 84 year-over-year in 2021, 123 in 2022, 51 in 2023, 38 in 2024 and 25 in 2025., we discussed earlier how latch's international expansion and expansion with tishman will drive extremely fast growth over the next couple of years. At the time, i'm recording this video latch trades at just twelve dollars a share which implies a 20 premium from where chamoth invested in the company. This puts latch's valuation of roughly 1.9 billion dollars, as the space was at a valuation of 1.5 billion dollars.

Just to be clear, investing in the ticker symbol tsia will mean that you will be invested in latch when the ticker symbol changes at this valuation. Latch stock has a price to sales ratio of 11, which is relatively low for a company expected to grow this fast. In the coming years, last expects to grow its revenue to 688 million dollars by 2022.. This puts latch's 2022 price to sales ratio at roughly 2.7.

Assuming latch is valued at a price to sales ratio of 5 by then this gives a clear path for latch to 2x in 2 years. Additionally, by doing the same calculations, but with the 2025 price to sales ratio at 4, latch will have a clear path to almost 4x in value in 4 years. This is, in my opinion, extremely attractive, but you should always do your own due diligence. This definitely isn't financial advice, and you do have to keep in mind that this is a growth company and margins are not expected to become profitable until 2024..

From 2020 to 2023 lodge is expected to lose roughly 60 to 120 million dollars per year before taxes, depreciation and amortization expenses. Overall, if you're, looking for a growth company that has solid prospects relative to its valuation, latch is a stock that you should look into if you're interested in seeing my full stock portfolio with explanations check out my patreon down below. Also, if you enjoyed this video, please hit the like button and subscribe and i'll see you in the next one.