Head-To-Head Analysis: Nextdoor (NYSE:NXDR) and Tencent (OTCMKTS:TCEHY)

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

Valuation and Earnings

This table compares Nextdoor and Tencent”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nextdoor	$257.65 million	3.58	-$54.20 million	($0.08)	-30.25
Tencent	$104.58 billion	5.05	$31.28 billion	$3.65	15.91

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

Profitability

This table compares Nextdoor and Tencent’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%
Tencent	29.83%	19.98%	12.03%

Institutional & Insider Ownership

35.7% of Nextdoor shares are held by institutional investors. Comparatively, 0.0% of Tencent shares are held by institutional investors. 33.5% of Nextdoor shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk & Volatility

Nextdoor has a beta of 1.36, suggesting that its stock price is 36% more volatile than the S&P 500. Comparatively, Tencent has a beta of 0.27, suggesting that its stock price is 73% less volatile than the S&P 500.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nextdoor	1	2	1	0	2.00
Tencent	0	2	2	0	2.50

Nextdoor currently has a consensus price target of $2.80, indicating a potential upside of 15.70%. Tencent has a consensus price target of $106.00, indicating a potential upside of 82.54%. Given Tencent’s stronger consensus rating and higher probable upside, analysts plainly believe Tencent is more favorable than Nextdoor.

Summary

Tencent beats Nextdoor on 11 of the 14 factors compared between the two stocks.

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 Tencent

Tencent Holdings Limited, an investment holding company, offers value-added services (VAS), online advertising, fintech, and business services in the People's Republic of China and internationally. It operates through VAS, Online Advertising, FinTech and Business Services, and Others segments. The company's consumers business provides communication and services, such as instant messaging and social network; digital content including online games, videos, live streaming, news, music, and literature; fintech services, which includes mobile payment, wealth management, loans, and securities trading; and various tools, such as network security management, browser, navigation, application management, email, etc. Its enterprise business comprises marketing solutions, which offers digital tools including user insight, creative management, placement strategy, and digital assets management; and cloud services, such as cloud computing, big data analytics, artificial intelligence, Internet of Things, security and other technologies for financial services, education, healthcare, retail, industry, transport, energy, and radio & television application. In addition, the company operates innovation business, which includes artificial intelligences; and discover and develops enterprise and next-generation technologies for food production, energy, and water management application. Tencent Holdings Limited was formerly known as Tencent (BVI) Limited and changed its name to Tencent Holding Limited in February 2004. The company was founded in 1998 and is headquartered in Shenzhen, the People's Republic of China.