PC.net 2022 Stock Pick: KIND
January 2, 2022 — by Per Christensson
It's the beginning of 2022 and time for the annual PC.net stock pick. OK, almost annual... I skipped last year since no companies seemed like an obvious value at the end of 2020. But this year, one company stands out: Nextdoor Holdings, Inc.
Nextdoor (ticker symbol: KIND) is the social networking platform for neighbors. Unlike other social media sites, Nextdoor aggregates content by location rather than friends or followers. It provides a way for neighbors to communicate online — even if they've never met in person.
While Nextdoor is an online platform (accessible through the website and app), it has a significant offline impact. By allowing users to share updates and concerns related to their local neighborhoods, people can interact with their neighbors in a way that wasn't possible before. Nextdoor is the counterplay to the metaverse, bringing people together in the real world.
Why I Like Nextdoor
Many social media companies exist, but no one serves local communities like Nextdoor. The company has already done much of the hard work, organizing users by location, with over 275,000 neighborhoods defined in 11 countries. The platform includes over 63 million verified neighbors — mostly in the United States. While there is still significant room for growth in the US, Nextdoor's international growth potential excites me the most.
The platform is still a bit rough around the edges, but I've been encouraged by recent changes. It reminds me of the early days of Facebook, when the user interface wasn't very polished, and the advertiser interface was unnecessarily complicated. Over the next few years, the Facebook team improved the service for both users and advertisers and turned the platform into a well-oiled money-making machine. I think the same thing will happen with Nextdoor.
As the platform grows, I expect Nextdoor to become one of the standard outlets for local companies to advertise. It is the perfect forum for local service providers to gain publicity. It's also a great place to buy and sell local goods. While Facebook Marketplace already provides a similar service, a lot of buying and selling already takes place on Nextdoor, and I expect it to increase dramatically as more neighbors join.
Finally, the user engagement on Nextdoor is incredible. The company emphasized this in their recent quarterly update, and anecdotally, I've seen the same thing. Posts from residents in my area often receive dozens of responses within a few hours. People are eager to respond to ideas and concerns from their neighbors — something that I think is universally true across the world.
Nextdoor (KIND) Stock Price
Nextdoor Holdings Inc. went public on the New York Stock Exchange on November 8, 2021. The stock opened at $11.12 and shot up over $18 before closing above $13. In the weeks following the IPO, enthusiasm over Nextdoor waned, and the stock dropped below $10. It finished the year at $7.89.
While the recent downward trend may seem discouraging, I think it provides a unique buying opportunity. Again, it's similar to Facebook, which dropped over 50% to the mid-teens after its IPO. Fast-forward a few years, and the stock is up nearly 800% from its IPO price and over 1,600% from the lows.
After the recent decline in Nextdoor's stock price, I believe the downside is limited. A modest increase to 16 is a 100% gain. I expect KIND to finish 2022 much higher. But I'm even more excited about the stock's growth potential over the next 5 to 10 years. With a current market cap of only $3 billion (compared to Facebook's $935 billion), it has tremendous room to grow.
For reference, my previous annual stock picks were:
Important: This article is the PC.net Editor's opinion, not professional investment advice. Always do your own research before buying stocks. Happy 2022!