Critical Analysis: Cardlytics (NASDAQ:CDLX) and Nextdoor (NYSE:KIND)

Cardlytics (NASDAQ:CDLX) and Nextdoor (NYSE:KIND) are both small-cap business services companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, dividends, analyst recommendations, valuation and earnings.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Cardlytics and Nextdoor, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cardlytics	0	1	3	0	2.75
Nextdoor	0	4	0	0	2.00

Cardlytics currently has a consensus target price of $15.50, indicating a potential upside of 28.52%. Nextdoor has a consensus target price of $2.85, indicating a potential upside of 43.94%. Given Nextdoor’s higher probable upside, analysts plainly believe Nextdoor is more favorable than Cardlytics.

Institutional and Insider Ownership

68.1% of Cardlytics shares are held by institutional investors. Comparatively, 35.7% of Nextdoor shares are held by institutional investors. 0.8% of Cardlytics shares are held by company insiders. Comparatively, 47.6% of Nextdoor shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Cardlytics has a beta of 1.44, meaning that its share price is 44% more volatile than the S&P 500. Comparatively, Nextdoor has a beta of 0.98, meaning that its share price is 2% less volatile than the S&P 500.

Profitability

This table compares Cardlytics and Nextdoor’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cardlytics	-43.56%	-25.38%	-8.32%
Nextdoor	-67.69%	-24.22%	-20.71%

Earnings and Valuation

This table compares Cardlytics and Nextdoor’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cardlytics	$309.20 million	1.89	-$134.70 million	($3.46)	-3.51
Nextdoor	$218.31 million	3.57	-$147.76 million	($0.38)	-5.21

Cardlytics has higher revenue and earnings than Nextdoor. Nextdoor is trading at a lower price-to-earnings ratio than Cardlytics, indicating that it is currently the more affordable of the two stocks.

Summary

Cardlytics beats Nextdoor on 8 of the 13 factors compared between the two stocks.

About Cardlytics

Cardlytics, Inc. operates an advertising platform in the United States and the United Kingdom. It offers Cardlytics platform, a proprietary native bank advertising channel that enables marketers to reach customers through their network of financial institution partners through digital channels, such as online, mobile applications, email, and various real-time notifications; and Bridg platform, a customer data platform which utilizes point-of-sale data and enables marketers to perform analytics and targeted loyalty marketing, as well as measure the impact of their marketing. The company was incorporated in 2008 and is headquartered in Atlanta, Georgia.

About Nextdoor

Nextdoor Holdings, Inc. operates a neighborhood network that connects neighbors, businesses, and public services in the United States and internationally. The company enables neighbors and organizations to get information, give and get help, and build connections. It also offers advertising solutions, designs to generate value for businesses for connection and sales expansion. The company is headquartered in San Francisco, California.