Critical Analysis: United Internet (OTCMKTS:UDIRF) and Nextdoor (NYSE:NXDR)

Nextdoor (NYSE:NXDR) and United Internet (OTCMKTS:UDIRF) are both communication services companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, profitability, institutional ownership and earnings.

Institutional & Insider Ownership

35.7% of Nextdoor shares are owned by institutional investors. 33.5% of Nextdoor shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk & Volatility

Nextdoor has a beta of 1.45, meaning that its share price is 45% more volatile than the S&P 500. Comparatively, United Internet has a beta of 0.19, meaning that its share price is 81% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Nextdoor and United Internet, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nextdoor	1	2	1	0	2.00
United Internet	0	0	2	0	3.00

Nextdoor presently has a consensus price target of $2.80, suggesting a potential upside of 21.48%. Given Nextdoor’s higher possible upside, research analysts clearly believe Nextdoor is more favorable than United Internet.

Valuation and Earnings

This table compares Nextdoor and United Internet”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nextdoor	$274.60 million	3.25	-$54.20 million	($0.08)	-28.81
United Internet	$6.85 billion	0.77	$114.57 million	($0.34)	-80.40

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Nextdoor	-11.08%	-6.16%	-5.45%
United Internet	N/A	N/A	N/A

About Nextdoor

Nextdoor Holdings, Inc. operates as the neighborhood network that connects neighbors, businesses, and public services in the United States and internationally. It enables small and mid-sized businesses, large brands, public agencies, and nonprofits to receive information, give and get help, and build connections. The company is headquartered in San Francisco, California.

About United Internet

United Internet AG, through its subsidiaries, operates as an Internet service provider worldwide. The company operates through Consumer Access, Business Access, Consumer Applications, and Business Applications segments. It offers landline-based broadband and mobile internet products, including home networks, online storage, telephony, and IPTV for private users; and telecommunication products ranging from fiber-optic direct connections to tailored ICT solutions, which include voice, data, and network solutions, as well as infrastructure services to national and international carriers and ISPs. The company also provides applications and services for home users, such as personal information management applications comprising email, to-do lists, appointments, and addresses; and online cloud storage, as well as domains and website solutions. In addition, it provides business applications for freelancers and small to medium enterprises, such as domains, websites, web hosting, servers, cloud solutions, e-shops, group work, online cloud storage, and office software. It offers its access products through the yourfone, smartmobile.de, 1&1, and 1&1 Versatel brands; and applications through GMX, mail.com, WEB.DE, home.pl, Arsys, STRATO, IONOS, Fasthosts, we22, InterNetX, united-domains, and World4You brand names. In addition, the company offers customers professional services in the fields of active domain management; performance-based advertising and sales services under the Sedo brand name; online advertising services under the United Internet Media brand name; and white-label website builder services under the we22 brand, as well as sells IT hardware. The company was incorporated in 1988 and is headquartered in Montabaur, Germany.