Learn how to invest in Nextdoor stock when the IPO arrives. Increase your chances of receiving an allocation by opening an account with a broker that offers IPO investing to eligible customers. Long-term buy and hold investors may prefer M1 Finance.
Table of Contents
Latest Nextdoor Stock IPO News
10/16/2020: Nextdoor Is Said to Eye Public Listing, $5 Billion Valuation
09/10/2019: Nextdoor adds new funding, closes growth round at $170M with $2.1B valuation
What is Nextdoor?
Nextdoor is a “hyperlocal” private social network platform where neighbors connect online.
It’s more local than Facebook and safer to transact than Craig’s List. Members must register with their real names and addresses.
Communication in the app is by neighborhood, and the user controls the communication radius.
The app helps people find professional services and contractors by asking neighbors for recommendations.
Nextdoor can also be used to track down missing pets, borrow tools, or sell unwanted furniture.
Members in my neighborhood often talk about annoyances such as local crime, disputed coyote sightings, airplane noise, speeders, and disrespectful neighbors.
Nextdoor is a San Francisco-based company founded in 2008.
This video is an example of how some users may utilize the network:
Is Nextdoor Stock Publicly Traded?
No, Nextdoor is still privately owned. The shareholders include founders, early investors (venture capital firms), and employees.
You can find a current list of Nextdoor investors at Crunchbase.
Nextdoor has raised at least $450 million in private financing since its founding.
Prominent venture capital investors include Kleiner Perkins, Benchmark, Tiger Global, Greylock Partners, Shasta Ventures, Riverwood Capital, and Bond.
When is the Nextdoor IPO Date?
The Nextdoor IPO or SPAC merger date is currently unknown.
Bloomberg reported in October 2020 that the company was considering multiple IPO options and planning to go public in 2021.
The company is considering a traditional IPO, direct listing IPO, and SPAC (special purpose acquisition company) merger.
One source told Bloomberg:
Nextdoor has rebuffed approaches from some special purpose acquisition companies to pursue growth, which has accelerated as a result of the pandemic.
We won’t get a better sense of when the Nextdoor IPO date or SPAC date will be until one of the following things happen:
- New information about the Nextdoor IPO date leaks to the financial press
- Nextdoor announces (or leaks) that it filed an S-1 confidentially with the SEC
- The SEC releases a publicly-available Nextdoor S-1 filing
- Announcement (or press leak) of a forthcoming SPAC merger
- Nextdoor selects a lead underwriter or banking partner for the IPO or SPAC
Those types of announcements would suggest the IPO is within six months or fewer.
Even when the company and SEC publicly release the S-1 filing, we still won’t know a firm date. However, the IPO date typically occurs a month or two after the S-1 is released to the public.
Bookmark this page for the latest Nextdoor IPO news.
Will There be a Nextdoor SPAC Acquisition?
A SPAC is a special purpose acquisition company, also known as a blank check company. They are shell companies designed to help established businesses go public without a traditional IPO.
The SPAC company merges with the established company and takes on the established company’s name. It’s also known as a reverse merger.
SPACs have become popular recently after Virgin Galactic, Lordstown Motors, and Nikola used them to become publicly traded companies.
So many SPACs have gone public in the past 12 months that it’s likely Nextdoor receives pitches each week.
This could put Nextdoor in a strong position to go public via a SPAC, considering it’s a well-established social media startup.
At a $5+ billion valuation, as suggested by Bloomberg reporting, Nextdoor is large enough to maintain its options and focus on growth before worrying about shareholders.
Using a SPAC to go public allows the company to skip the complicated and expensive IPO process.
Not all companies are ready to IPO, making SPACs an attractive alternative to an IPO where the company can still raise new funds.
However, the more established a company is, the more resources it can hire to facilitate the traditional IPO process.
When early investors and employees need liquidity, and the company generates more significant revenue, the company will decide on the best way to go public — a traditional IPO, direct IPO, or SPAC merger.
What is the Nextdoor Stock Price?
Since Nextdoor is not publicly traded on a stock exchange, there is no Nextdoor stock price yet.
The company and its underwriters won’t publicize an estimated IPO price range until after the initial S-1 filing is made with the Securities and Exchange Commission (SEC).
What is the Nextdoor Stock Symbol? Nextdoor Ticker?
Nextdoor has not yet submitted public filings to the SEC. Therefore, it is not yet known what the Nextdoor stock symbol will be. We can only speculate.
Here are some possibilities that appear to be available in the U.S.:
- N
- ND
- NTDR
- NXTD
- NDOR
NEXT and DOOR are both taken.
Will Nextdoor Stock be a Motley Fool Stock Advisor Recommendation?
We won’t know until after the IPO if Nextdoor will be a Motley Fool Stock Advisor recommendation. However, Nextdoor fits the mold of high-growth, disruptive business models that the Fool typically recommends.
Other social media companies have enjoyed previous Fool recommendations, including Facebook, Twitter, and Pinterest.
Nextdoor will undoubtedly be on their radar once public.
When the Motley Fool recommends a company, there is usually an immediate spike in the price. Fool newsletter subscribers are notoriously long-term-minded and rarely sell, meaning the stock price will continue to rise.
Nextdoor may also receive a recommendation by the Motley Fool Rule Breakers newsletter or other premium services. Both services have handily beaten the broader market since the early 2000s.
Read this Motley Fool Stock Advisor review to learn about the stock selection methodology and about how you can participate in excellent returns.
Stock Advisor is currently half-off at just $99 for an annual subscription.
Learn More about Stock Advisor
Can you Invest in Nextdoor Stock? Four Potential Ways
Generally, it’s challenging to acquire shares of high-demand IPOs. Most investors will need to settle for buying the stock after it begins trading.
IPO underwriters typically give their best customers access first, then allocate shares to certain institutions and brokers often tied by professional relationships.
When the largest brokers receive IPO shares, they divvy them up amongst their eligible customers, prioritizing their most valued customers first (wealthiest).
For high-demand deals, most investors will not get shares.
In recent years, a few brokers have partnered with the IPO investing app ClickIPO to give access to individual investors based on a proprietary rating instead of assets under management.
The ClickIPO rating, known as the Investor Score, rates higher those investors who hold IPO shares instead of flipping them.
Though ClickIPO has not demonstrated the ability to allocate app users with high-demand IPO shares, they’ve executed dozens of lesser-known IPOs on its platform.
For individual investors without a high net worth, ClickIPO and its partner brokers TradeStation and Webull are the most likely chance of participating in IPOs since the demise of LOYAL3 and Motif Investing.
With that, here are four potential ways to own Nextdoor Stock:
- Buy Nextdoor stock after it begins trading
- Buy Nextdoor stock in the Nextdoor IPO through a broker
- Acquire through a directed share program (unlikely, but possible)
- Attempt to acquire Nextdoor stock in pre-IPO secondary marketplaces before the IPO
1. Buy Nextdoor stock after the Nextdoor IPO
Since acquiring IPO shares is almost always challenging for individual investors, the easiest way to own Nextdoor stock is to wait for the IPO to complete.
Realistically, unless your brokerage account is worth more than $1 million and your broker regularly receives IPO allocations, you are unlikely to get in on high-demand IPOs.
In some cases, patient investors can buy the stock at or below the IPO price. This is not always true.
The Beyond Meat IPO, for example, soared and never looked back. But Uber, which many predicted to rise steeply, actually fell on the IPO date.
Spending significant effort to acquire IPO shares may not be worth it in the end. You may also spend time and effort to obtain shares but only receive a small allocation, limiting upside gain.
Though IPOs can provide one-day gains north of 20%, even up to 100% in rare cases (such as Airbnb and Doordash), the most significant gains will come during the decade following the IPO if the company is genuinely disruptive.
Take, for example, Netflix, Amazon, or Tesla. You could have bought the stock years after the IPO and still experienced gains of more than 1,000%
If you’re an investor that wants to buy Nextdoor stock for the long-term, consider opening a position after the IPO and averaging down if the stock falls.
Short-term traders may angle to acquire IPO shares and hope for a short-term pop.
2. Buy Nextdoor stock in the Nextdoor IPO through a broker
Ambitious investors can position themselves to invest in the Nextdoor IPO once it arrives.
Your chances of getting IPO shares depends on four factors:
- IPO demand
- Your broker and eligibility
- Your assets under management (AUM) at the broker
- Propensity to flip shares
As IPO demand increases, the chances of receiving IPO shares decreases. Therefore, the IPOs that are most interesting to the masses are the hardest to access.
Most online brokers do not offer IPO shares. Check directly to see if yours does, or look at our list of best brokers for IPO investing.
Legacy brokers, such as Fidelity and Charles Schwab, have minimum eligibility requirements and penalties for flipping shares (selling shortly after the IPO).
But even if eligible, the brokers must sub-allocate whatever limited shares they receive from the IPO underwriters.
This process is non-transparent, but priority is likely given to the wealthiest investors first.
For example, if your account balance is $500,000, and that makes you eligible according to terms, the broker may only have enough IPO shares to distribute to customers with assets of $3,000,000 or more.
This brings us to ClickIPO.
ClickIPO is a smartphone app that partners with TradeStation (through the app) and Webull (directly) to deliver IPO access to ordinary investors.
There is no minimum account value required.
ClickIPO prioritizes IPO share distribution by its Investor Score, which measures how likely an investor is to flip shares. Investors more likely to flip shares are considered to be less desirable IPO beneficiaries (in theory).
Therefore, ClickIPO offers a value proposition to underwriters and newly public companies.
Though quick profits from IPOs is one way the large underwriter reward whale-sized clients.
Click here to subscribe to Access IPOs and download the free 15-page eBook, How to Invest in IPOs – A Fundamental Guide for Ordinary Investors, which provides more detail on this dynamic.
Joining a broker that offers access to IPOs does not guarantee a share allocation, especially in high-demand IPOs. You are probably better off waiting for the company to start trading after the IPO.
3. Potential Directed Share Program
Another possibility is a directed share program, though I consider this to be unlikely.
Sometimes when companies file their S-1 SEC filing (to begin the IPO process), they include a directed share program for executives, affiliates, and other people who helped the company grow.
Since Nextdoor is made possible because of its dedicated user base, it’s possible the company may offer IPO shares to active users.
This has happened before.
Uber offered shares to drivers that completed a certain number of trips.
GoPro offered shares to its email list.
Airbnb offered IPO shares to hosts.
In Nextdoor’s case, it seems the user base may be too large for this to be feasible. But it’s something to watch.
Pay attention to the news, this page, and your email in case it happens.
4. Attempted to acquire shares in pre-IPO secondary marketplaces
Founders, early employees, and investors often find themselves in a difficult predicament. They own valuable shares of a company that doesn’t trade publicly.
These shareholders might have multi-million dollar net worth’s because of their stock holdings, but the stock is not liquid because it doesn’t trade on an exchange.
A few platforms have evolved to gives these individuals a way to liquidate their holding before the IPO. Two of the more prominent sites are EquityZen and Sharespost.
Both sites bring liquidity to an otherwise illiquid asset. Accredited investors (those with invested assets > $1,000,000) may join these sites and attempt to buy these companies’ shares when they become available.
The shares are only offered to accredited investors because the company’s financials are not publicly filed with regulators yet, increasing the investors’ risk.
For high-profile companies, demand is high, lowering your chances of acquiring shares. The author considers this a low-likelihood way to acquire shares. However, some readers have written with success stories buying shares this way.
Where can I find the Nextdoor S-1 Filing?
The Nextdoor S-1 filing won’t be publicly available until released. Once it is public, we’ll post it here.
You can find a real-time SEC feed of the latest IPO filings from other companies on the recent S-1 filings page.
Best Brokers to Buy Nextdoor Stock
What is the best online brokerage for buying Nextdoor stock?
If you want to attempt to participate in IPOs, TradeStation and Webull are the best low-minimum investment IPO brokers for investors with assets under $100,000.
See the complete list of best brokers for IPO investing here.
Joining a broker that offers access to IPOs does not guarantee a share allocation, especially in high-demand IPOs. You are probably better off waiting for the company to start trading after the IPO.
Long-term buy and hold investors may prefer a broker not as geared toward frequent trading.
As an individual investor, you’ll want to open an account with a commission-free online broker. That way, you’ll invest most of your money instead of waste it on fees.
I’m a big fan of the online brokerage M1 Finance. M1 Finance is a reliable and robust, no-fee online broker for beginner to advanced investors.
As your investing skills and portfolio mature, M1 is one of the best platforms to scale.
Investing in stocks is 100% free on the platform. They also offer an integrated checking account and low borrowing rates. Read my complete M1 Finance review here.
The platform is more intuitive than old-school brokers because it’s built on a modern technology platform. You create portfolio “pies” that contain all the stocks and ETFs you want to own and in what percentages. Add Nextdoor stock to your portfolio pie once it begins trading.
M1 Finance does not offer IPO access. But it’s my favorite for long-term investing, which is my preferred strategy for disruptive IPO companies.
* Disclosure: The web page contains affiliate links from our partners. If a reader opens an account or buys a service from a link in this article, we may be compensated at no additional cost to the reader. Opening an account with a broker that provides access to IPOs does not guarantee the customer allocations of specific IPOs. The author is long TSLA, ABNB, FB, TWTR, PINS.