As the Covid-19 pandemic persists, San Francisco-based Nextdoor Holdings (NYSE:KIND) is committed to connecting neighbors (or at least people in the same general vicinity) through technology. It’s an interesting business model in the abnormal “new normal,” yet KIND stock just can’t seem to find its footing two months after it’s Wall Street debut.
But hey, it’s a new year and maybe things will change for the better. As we’ll see, Nextdoor has been diligent in conducting its due diligence, and unearthed some notable neighborly insights.
Besides, 2021 was the year of what we might call the “great rotation.” Smaller, more speculative businesses like Nextdoor were abandoned on Wall Street as investors crowded into more established mega-caps.
Perhaps data-driven human connection will be prioritized in 2022, opening the door for Nextdoor as the company strives to be both personal and profitable, if possible.
A Closer Look at KIND Stock
Following the close of its merger with special purpose acquisition company (SPAC) Khosla Ventures Acquisition Co. II, Nextdoor opened for public trading on Nov. 8, 2021.
KIND stock got off to a great start as it closed at $13.01 on that first day, up 17%. Unfortunately, it was all downhill from there.
The stock slid to the $11 area in late November, and then below $10 in December. At the end of 2021, the share price was just $7.89, joining a roster of SPAC mergers that wrapped up the year in the red.
This seems unfair, but who ever said that Wall Street is fair? Amid the aforementioned “great rotation” into bigger companies, it seems that KIND stock was collateral damage.
At the very least, the stock should be able to recover $10 in early 2022. Hopefully soon, the selling pressure will subside as investors discover Nextdoor’s considerable growth potential.
Neighbors and Numbers
The Nextdoor app is truly unique and apropos in a time so many people feel isolated and crave human connection.
To sum it up, instead of encouraging its users to interact with just anyone online, Nextdoor focuses on people living near each other.
In other words, Nextdoor seeks to foster kindness between its users by allowing neighbors to cultivate relationships in the real world through a social platform.
Of course, beyond all of the warm-and-fuzzy stuff, Nextdoor has to monetize its app somehow. Thus, it allows businesses to “Instantly reach your most valuable customers — your neighbors — and become a trusted part of the neighborhood.”
So, Nextdoor combines companionship with commerce — nothing wrong with that, really. Besides, the company’s research suggests that businesses can greatly benefit from Nextdoor’s tech tools.
What the company found is that localized messaging on Nextdoor drives 58% higher sponsored-post engagement. Furthermore, Nextdoor discovered that 21% of neighbors reported using social media to see updates from brands.
Also, 15% of neighbors clicked a sponsored post on a social network, while 10% shared a brand’s post on a social network.
Turning a Profit, Finally
So, neighbors are engaged with businesses and Nextdoor can monetize its app — that’s good news for the company.
The fiscal figures seem to bear this out, as during the third quarter of 2021, Nextdoor generated $52.7 million in revenues, representing a 66% year-over-year increase.
Turning to the bottom line, however, we can discern Nextdoor’s growing pains. From Jan. 29 to Sept. 30, 2021, the company incurred a rather sizable net earnings loss of $12,931,766.
That’s a hard number to swallow, but don’t fret yet. As it turns out, Nextdoor’s has shifted towards a more profitable profile recently.
During the three months that ended on Sept. 30, 2021, Nextdoor posted not a net loss, but actually a net profit of $4.01 million.
Just maybe, then, connecting neighbors (and businesses too) is a sustainable way to conduct business.
The Bottom Line
KIND stock is a feel-good investment, even if the investors probably don’t feel very good.
We can hope that the stock will soon turn around and, at the very least, recover to the key $10 level. The “great rotation” out of smaller businesses like Nextdoor can’t last forever, right?
In the meantime, keep an eye on Nextdoor as the company’s bottom line appears to be improving. Sooner or later, Wall Street should come to appreciate the profit potential of Nextdoor’s neighbor-connecting technology.
On the date of publication, David Moadel 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.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
