Nu Holdings’ (NU) share price has soared as its growth in Latin America accelerates. The stock price has increased by nearly 50% in the past year. This is more than most other fintech firms like PayPal, Block and Shift4 Payments. Stocks of the Nasdaq 100, S&P 500 and other indices have also performed better than this stock.
Fintech company grows rapidly
Nu Holdings has one of the most rapid growth rates in Latin America. This is an innovative company which is disrupting Brazil’s banking industry. It has become the second largest firm by market capitalization in Brazil after Petrobras. Saudi Arabia, Softbank and Warren Buffett are all investors.
Nu Holdings has seen its annual revenue soar from $337,000,000 in 2019 to $6.45 Billion in 2023. The management is confident that the trend will continue. This was achieved by offering a variety of solutions, such as deposits and loans in a single application.
The company announced in its most recent financial report that they had reached almost 100 millions customers. This is a great achievement for a business that only had 1.9 million subscribers last year.
Nu Holdings is confident that its total market addressable area will be huge, considering the fact that South America, Central American and Mexico has over 660 millions customers. About 54% of Brazil’s adult population is Nu customers. Nu is expanding into the US. I think this could be a bad decision, just as HSBC or Barclays learned.
Nu Holdings has achieved this growth with little marketing spending, and the majority of their growth is driven by word-of-mouth. It has become profitable fairly quickly as a result. In 2023, it made a profit of more than $1 billion after losing $364 millions the year before.
Nu Holdings to earn ahead
Nu Holdings’ financial results scheduled for Tuesday of next week will have a major impact on the stock price. The results of the financial report will reveal whether or not Nu Holdings is continuing on its current growth trajectory.
Recent results show that the company’s total revenue increased by 64% to $2.736 Billion in its first quarter. The previous quarter, it had earned $2.4 billion and the third quarter last year $2.13.
Nu Holdings continues to produce strong profits. Nu holdings made $142 millions in the first quarter 2023, followed by $225 in the second and third quarters of that year.
Analysts have high hopes for Nu Holdings’ earnings. Analysts expect its revenues to reach $2.92billion, which represents a growth of 56% on an annual basis. Analysts expect that the revenue of the company will reach $11.4 billion for the current year and $14.5 billion by 2026.
Nu Holdings will make $0.09 per share this quarter, followed by $0.1 for Q3, and then $0.41 in 2018. Nu Holdings’ financial performance has been better than expected in the past. This trend is likely to continue.
Nu valuation metrics
This growth rate also explains the high valuation of this company compared with other fintech firms.
Nu Holdings has a price-to earnings (P/E), trailing 12 months (TTM), ratio of 47, and an forward multiple of 32.72.
Dave, an American online bank that provides solutions for banking via the internet is the closest comparable. Dave’s TTM P/E is 13.5, and its forward multiple is 11.4, partly due to the fact that it has a smaller growth multiple.
Nu Holdings is also comparable to SoFi, a digital bank that has become very popular in the US. SoFi’s revenues rose from $1.59billion in 2022, to $2.06billion in 2023. The company has a negative multiple of P/E because it still makes a loss.
Nu Holdings, the largest fintech company in terms of valuation, is on its way to surpassing PayPal. PayPal has a market cap exceeding $66 billion. PayPal’s stock has underperformed after being faced with strong competition as well as significant margin pressures.
Analysts think that Nu Holdings’ valuation is justified due to its growth rate and that the company has begun making a profit. It is also gaining market share on the Latin American markets.
Nu Holdings Stock Price Analysis
On Monday, the NU shares fell to $9.70 as other stocks tumbled. The price of NU shares then made a dramatic comeback, as the majority of stocks recovered and traders focused on the earnings.
The stock has risen above its key resistance at $12.24. This was the highest level in March 2022 and shortly after going public. Stock has stayed slightly above both the 100-day and 50-day exponential moving (EMA) averages.
While a lot of things can occur after the earnings report, I am inclined to believe that stock prices will increase. This view suggests that the stock will likely rise above its current price to an all-time record high of 13.60 dollars, or almost 10% higher.
The post Nu Holdings Stock braces itself for volatility before earnings could be updated as new information unfolds
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