Why Did Nextdoor Holdings Stock Rocket Higher This Week?

Although most investors may not be familiar with Toronto-based EMJ Capital, its founder has gained more recognition in recent months. Eric Jackson recently made headlines with a retail investor activist campaign that led to a 15x move in one stock.

This week, he highlighted social networking service Nextdoor Holdings (NYSE: NXDR) in a social media post, sending shares soaring more than 50% at one point. Nextdoor stock was still higher for the week by 30.3% late Friday morning, according to data provided by S&P Global Market Intelligence.

Meme stock mania isn't dead

Earlier this year, Jackson posted about digital real estate platform Opendoor Technologies, triggering a surge in retail investor interest that drove shares higher by more than 1,600% in just a few months. Like many meme stock runs before it, though, Opendoor stock sank quickly from its peak.

That doesn't mean the hedge fund manager was wrong in his analysis, however. A prior bullish call on Carvana proved correct, as shares of the online used car retailer rocketed over 100x in the last three years.

Investors should view any social media campaign on a stock with critical scrutiny, though. That skepticism is likely the reason for Nextdoor's significant decline from the week's highs. Jackson posted that he felt Nextdoor is "the most mispriced Agentic-AI platform of the 2020s."

Adding an artificial intelligence (AI) angle to his post likely drew even more views. Nextdoor may well have growth ahead of it. But the stock is now valued at a market cap of about $1 billion.

That's a relatively high valuation for a company with approximately $250 million in sales and more than $60 million in net losses over the last 12 months.

Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.