Nextdoor Class Action Lawsuit: Dismissal and Pending Privacy Case

The Nextdoor class action lawsuit was permanently dismissed on November 20, 2025, when U.S. District Judge Edward J. Davila of the Northern District of California threw out the investors’ securities fraud claims with prejudice. The judge ruled that shareholders failed to show Nextdoor or former CEO Sarah Friar made false statements, acted with fraudulent intent, or caused the stock losses at issue.¹

What Investors Alleged

The case, Adamo v. Nextdoor Holdings, Inc. (Case No. 5:24-cv-01213-EJD), was filed February 28, 2024, covering a class period from July 6, 2021 to November 8, 2022. That window bracketed Nextdoor’s SPAC merger with Khosla Ventures Acquisition Co. II and its first year as a public company trading under the ticker “KIND.”²

Lead plaintiff Keith Hollingsworth accused Nextdoor and Friar of misleading investors on four fronts:

The definition of “active users” swept in people who merely opened a marketing email, without ever logging into the app or website. The complaint alleged roughly half of reported active users fit this email-only category and generated little or no advertising revenue.³
Nextdoor’s total addressable market was smaller than the 312 million households it represented, and the U.S. market was already largely saturated when the class period began.⁴
Fiscal 2022 revenue guidance had “no reasonable basis in fact,” and the company was tracking tens of millions of dollars below its own projections.⁵
Pre-merger results were temporarily boosted by pandemic demand that pulled forward future advertising revenue, and growth was already reversing when investors were pitched the deal.⁴

The suit brought claims under Sections 10(b), 14(a), and 20(a) of the Securities Exchange Act of 1934.⁶

Why the Court Dismissed the Case

Judge Davila first granted a motion to dismiss on May 19, 2025, but gave Hollingsworth a chance to amend. Nearly every challenged statement fell out on standing grounds because the plaintiff had not owned shares when they were made. That left one live statement: a May 10, 2022 comment by Friar about “active users” and community growth.⁷

The court found no misleading statement there either. Nextdoor’s public filings had explicitly defined an active user to include anyone who opened a content email. Because the definition was disclosed, Judge Davila wrote, it “eliminates any reasonable expectation that the term could mean something else.”⁷

Hollingsworth filed a Second Amended Complaint on June 16, 2025, pivoting his theory. Rather than attacking the definition, he now argued Friar had misled investors about the split between users active on the platform itself and users who only engaged through email. On November 20, 2025, the court rejected this version on three separate grounds:

No material misstatement. Terms like “active users,” “community,” and “daily use case” did not imply any specific ratio of on-platform to off-platform users, and a reasonable investor would understand the term to cover both, especially given the company’s disclosures.⁸
No fraudulent intent. The plaintiff pleaded no specific facts showing Friar or other defendants knew their statements were misleading or acted recklessly. The court rejected the argument that the on-platform ratio was so central to the business that executive ignorance of it would be “absurd.”⁸
No loss causation. The court found no link between the alleged misstatements and later drops in Nextdoor’s stock price, which were not tied to any revelation of fraud.⁸

Why the Dismissal Is Final

Dismissal “with prejudice” bars Hollingsworth from refiling. Judge Davila concluded the complaint “could not possibly be cured by the allegation of other facts,” ruling out any further amendment.⁸

The secondary claim against Friar as a “control person” under Section 20(a) also fell. That theory requires an underlying securities violation to attach to, and once the primary claim was gone, the control-person claim went with it.⁸

A Separate Privacy Case Is Still Active

The securities dismissal does not end every legal challenge to Nextdoor. A separate effort accuses the company of using tracking technology to collect users’ precise location data and share it with Microsoft for targeted advertising. Because Nextdoor’s member agreement contains a mandatory arbitration clause blocking traditional class actions, the effort is structured as mass individual arbitration claims organized by the law firm Milberg, LLC, through ClassAction.org. As of March 2026, the matter was still in an investigation and recruitment phase.⁹

1
Cooley LLP. Nextdoor Secures Dismissal With Prejudice in Securities Class Action
2
Bragar Eagel & Squire. Nextdoor Holdings (KIND) Securities Fraud Class Action
3
Bloomberg Law. Nextdoor, Ex-CEO Defeat Investors’ Active User Base Lawsuit
4
AccessNewswire. Class Action Filed Against Nextdoor Holdings
5
PR Newswire. Levi and Korsinsky Reminds Nextdoor Holdings Investors of Pending Class Action Lawsuit
6
CaseMine. Adamo v. Nextdoor Holdings, Inc. et al.
7
Cooley LLP. Court Order, Adamo v. Nextdoor Holdings
8
Levi & Korsinsky. Federal Judge Dismisses Securities Fraud Claims Against Nextdoor Holdings
9
ClassAction.org. Nextdoor Data Privacy