Nextdoor Holdings (NYSE:KIND) is a social network site “where you connect to the neighborhoods that matter to you so you can belong.” KIND Stock on the other hand, is making waves by generating enough revenue to push this new social medium platform into 2022 with momentum.
The goal is to build a neighborhood network connecting neighbors with all local businesses, public agencies, and nonprofit organizations. There is a unique approach to this social media platform, “Nextdoor is bringing two powerful forces together for good: your mission + the kindness of neighbors.”
If you are wondering whether this social media platform has the potential to become the next big thing among the highly saturated digital world, we are living which is dominated by a small number of popular and very large social platforms with a global audience, my goal in this article is to address this question.
The Concept
The broader concept of Nextdoor Holdings is interesting from a social, economic, and business perspective. Trust and reliability are important social values. In big cities, becoming an active part of the local communities is not easy.
There is too much noise related to information, which makes it hard to recognize the true value of a well-organized neighborhood network. A network that will make our lives easier, smarter, simpler, less stressful, getting things done without overthinking. We can even build strong real-world connections.
In case you missed your lovely pet, you can just post it on the social platform of Nextdoor Holdings, ask questions, and chances are you will not miss your pet back soon, your neighbors will help you out. This is precious.
Is it a great business model to drive the KIND stock higher over the next years? It seems as if the early momentum of public trading on Nov. 8., 2021 with gains of 17% closing at $13.01 has already faded.
At the close of the U.S. stock market on Dec. 21, 2021, the KIND stock price was $7.95, losing about 35% off its high price achieved on its trading debut.
The Business Model
In its 2021 Investor Presentation, Nextdoor Holdings has provided us with its perspective of why its social media platform may become a truly big hit and a viable business.
The key catalysts to drive growth are a robust digital advertising market with future new revenue models, a high barrier to entry making a local network both hard to build and time-consuming, the nature of this neighborhood network is only digital to have a purpose and become authentic and finally, there is a proven team which will execute this business plan with success.
The statistics for Nextdoor Holdings show traction is already present. There are more than 60 million verified neighbors, more than 27 million weekly active neighbors and nearly one in three U.S. households have already been using this social media platform. On top of that, there is an international audience in more than 11 countries.
The firm has reported that being social in an era of social distancing due to the coronavirus is too important as knowing a few neighbors can reduce loneliness. Other benefits of being a member of local society are the growth of sharing economy and shopping locally, which can help save money, get customized deals, foster kindness at a local level.
On a business level, Nextdoor Holdings estimates that it has a strong competitive moat. Local recommendations, help build a network where real people use trusted information on hyperlocal proximity, not just being online. This highly targeted data helps to provide instant messaging from public agencies and instant distribution of goods and services from local businesses.
In this neighborhood network, engagement and loyalty are two prime values. Nextdoor Holdings has stated that after two years about 54% of its audience remains engaged. The monetization potential from a verified audience seeking an alternative to other popular social media platforms is estimated to be a market of more than $1 trillion. This market would be the percentage of people who visit Nextdoor at least once per month but do not visit other social media platforms at least once per month.
A social media platform to grow needs both engagement and new users. This local social media platform uses several ways to boost user growth. There are neighborhood guides, video tools, real local information by just asking a neighbor, sharing content to multiply this friend’s network.
If you are wondering what the main source of revenue for Nextdoor Holdings is, then you should know that it is digital advertising. The firm estimates that digital advertising TAM (total addressable market) represents a global opportunity of more than $600 billion by the year 2024. The penetration potential for additional households to use the platform in global markets is significant.
What About the Fundamentals?
I have not referred at all to the latest third-quarter 2021 financial results. In summary, the firm is losing money but has experienced high revenue growth. With a lack of consistent financial data to analyze, buying shares of Nextdoor Holdings is like buying a lottery ticket. The odds to have a large profit quick are not meaningful statistically. Keep this special kind of social media platform in your list of stocks that need to prove momentum is sustainable in 2022 until more financial data is supportive.
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.
