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Investor Alert: Nextdoor Holdings Hit with Class Action Lawsuit


Robert Tavares

March 1, 2024 - 02:05 am


Legal Challenge Emerges as Nextdoor Holdings Faces Investor Lawsuit

NEW YORK, Feb. 29, 2024 /PRNewswire/ -- The esteemed law practice of Bronstein, Gewirtz & Grossman, LLC, renowned on a national level, extends a notification to investors that a class action lawsuit has been initiated against Nextdoor Holdings, Inc., formerly known as Khosla Ventures Acquisition Co. II ("Nextdoor" or "the Company") and several of its top executives.

Defining the Class

The lawsuit aims to secure compensation on behalf of any persons or entities that procured or otherwise acquired security holdings from Nextdoor during the defined period between July 6, 2021, and November 8, 2022 – a duration now referenced as the "Class Period." Those who find themselves within this grouping are prompted to participate in the case by consulting the law firm’s website at

Inside Nextdoor's Business Model

Nextdoor’s business operations center around a nuanced, hyperlocal online social networking service designed to bridge connections between neighbors, public agencies, and businesses across the digital sphere.

The emergence of Nextdoor Holdings, Inc., on November 5, 2021, was the culmination of a merger between the privately held entity, Nextdoor, Inc. ("Nextdoor Private") and a special purpose acquisition company known to the market as Khosla Ventures Acquisition Co. II ("KV Acquisition Co."). With the merger final, KV Acquisition Co. took precedence as the surviving corporate body and rebranded itself as Nextdoor Holdings, Inc.

Nextdoor’s platform intricately facilitates interactions, be it through neighborly discourse, the sharing of opinions and images, or updates on local community events. The platform is designed not just as a network but as a market square for exchanging services and goods. Consequently, the core value and revenue potential of Nextdoor’s advertising model closely hitch to the engagement metrics and size of its user community.

Financial Turbulence and Its Aftermath

On March 1, 2022, Nextdoor publicized its earnings for the quarter coinciding with the completion of the merger. This report defied previous assurances of sustained growth by revealing a stark dip in the revenue growth rate – resting at 48% year-over-year growth in contrast to the prior quarter's 66% figure presented before the November 2, 2021, shareholder gathering.

Further analysis yielded a quarterly average revenue per weekly active user (ARPU) of $1.65, pointing to a significant deceleration in growth rate, tumbling from 38% to just 12% year-over-year – starkly suggesting that the Company's ability to monetize its user base was floundering. Following this disclosure, the market's reaction was swift and severe, with Nextdoor’s share price plummeting by nearly 14%, from $6.24 on March 1 to $5.39 by March 4, 2022.

The condition seemed to exacerbate on May 10, 2022, when Nextdoor exposed that the growth of its global weekly active users (WAUs) had achieved a lackluster 1% sequential increase and that, startlingly, the U.S. WAUs had undergone a regression by some hundred thousand users from its previous count. Resulting from this news, the valuation of Nextdoor's Class A common stock fell close to 8%.

On August 9, 2022, the situation appeared to further decline as Nextdoor disclosed that its revenue growth had slackened to a mere 19% year-over-year, complemented by a sequential drop in U.S. WAUs—a second time in a row to 29.2 million. Subsequent to this information, Nextdoor's stock once again tumbled, this time by roughly 25%.

Finally, on November 8, 2022, on declaring that its revenue had not only decelerated but had physically contracted by $1 million to $54 million quarter over quarter, symbolizing a minimal year-over-year growth of 2%, and that the quarterly ARPU growth had turned increasingly negative, suffering a 12% downturn from the preceding year's parallel quarter, the stock witnessed another blow—an approximate 11% decrease.

In totality, Nextdoor's stock, from the price zenith of $18.59 post-merger, plummeted nearly 90%, thus engendering substantial pecuniary losses and economic detriment to the investors under the federal securities regulations.

The Allegations and their Substance

The gravamen of the Complaint lies in the allegation that the Defendants consistently promulgated statements which were materially incomplete or deceptive upon utterance. This was due to a reportedly willful or reckless disregard for several detrimental truths concerning Nextdoor and Nextdoor Private’s business health, operational efficiency, and financial status:

  1. The influences of COVID-19 had amplified Nextdoor's financial results before the Merger, artificially heightening demand for the platform and prematurely siphoning future ad revenue growth.
  2. Instead of experiencing a consistent uptick, growth tendencies had started to wane as early as the Class Period's inception.
  3. Nextdoor’s total addressable market was significantly slimmer than the initially projected 312 million households.
  4. As the Class Period began, the saturation within Nextdoor's crucial U.S. market had already reached advanced stages, burdening the Company's prospects for user monetization and impeding the potential rise of both its ARPU and U.S. WAUs.
  5. Consequently, Nextdoor’s fiscal predictions for the year 2022 lacked a sound empirical foundation, visibly veering off tens of millions of dollars from the revenue trajectory offered to investors.

What Investors Should Anticipate

With the class action lawsuit filed, affected investors may seek information on the Complaint or might request guidance from Bronstein, Gewirtz & Grossman, LLC’s website. Complementary contact avenues include reaching out to Peretz Bronstein, Esq., or his Law Clerk and Client Relations Manager, Yael Nathanson, at 332-239-2660. Affected parties must register their intent by April 29, 2024, if they hope to be considered for the position of lead plaintiff. It is noteworthy that entitlement to a potential recovery does not necessitate serving as the lead plaintiff.

The Pursuit of Justice: No Financial Burden on Investors

Bronstein, Gewirtz & Grossman, LLC is devoted to prosecuting class actions on behalf of aggrieved investors on a contingency fee basis. This ensures that the legal aid provided to investors requires reimbursement for out-of-pocket expenses and attorney’s fees solely if the case concludes with a positive recovery.

Bronstein, Gewirtz & Grossman’s Track Record

Renowned for their advocacy, Bronstein, Gewirtz & Grossman, LLC has been acclaimed nationally for their commitment to representing investors in securities fraud class actions and shareholder derivative litigation. The firm boasts a history marked by the recovery of hundreds of millions for shareholders across the United States.

The firm's assurance to its clientele is evident; their reach extends to investors an offer of potent, tenacious representation. Attorney advertising. It must be noted that prior results do not guarantee similar outcomes.

For further details or inquiries, interested parties are encouraged to connect with Bronstein, Gewirtz & Grossman, LLC:

Contact: Bronstein, Gewirtz & Grossman, LLC Peretz Bronstein or Yael Nathanson 332-239-2660 | [email protected]

SOURCE: Bronstein, Gewirtz & Grossman, LLC

The legal nuances and the potential repercussions of this case will continue to evolve as more information becomes available and interested parties further their actions in the hope of recuperating their financial losses.