Nextdoor Holdings (KIND) saw its stock price plummet by 5.96% in pre-market trading on Thursday, despite reporting better-than-expected first-quarter earnings for 2025. The social networking service for neighborhoods posted results that surpassed analyst estimates, yet investors seemed to focus on other aspects of the report.

According to the earnings summary, Nextdoor reported a quarterly adjusted loss of 6 cents per share, beating the mean expectation of a 7-cent loss from five analysts. This result also showed a slight improvement from the 7-cent loss reported in the same quarter last year. Revenue for the quarter rose 1.9% to $54.18 million, surpassing the analyst expectations of $53.12 million. Despite these positive figures, the company still reported a quarterly loss of $21.95 million.

The market's negative reaction to Nextdoor's earnings report may be attributed to several factors. While the company beat expectations, the revenue growth of 1.9% year-over-year is relatively modest. Additionally, the stock has already fallen by 1.3% this quarter and lost 36.3% year-to-date, indicating ongoing investor concerns about the company's growth prospects. The mean earnings estimate for Nextdoor has fallen by about 36.4% in the last three months, suggesting analysts have been lowering their expectations. These factors, combined with the broader market sentiment towards tech stocks, may have contributed to the sharp decline in Nextdoor's stock price despite the earnings beat.