Nu Holdings stock price has done well this year, and could be on the cusp of a big breakout as it publishes its quarterly financial results. It has soared by 82% this year, beating the S&P 500 and Nasdaq 100 indices. This surge has brought its market cap to over $72 billion, making it the second-biggest company in Brazil.
Nu Holdings stock prepares for earnings
Nu Holdings is a Warren Buffett-backed fintech company that has disrupted the banking industry in Brazil and other Latin American countries. In terms of users and revenue growth, it has also become the biggest neo bank in the world.
Nu Holdings’ platform makes saving money, investing, borrowing, and paying their bills easier. Over time, its annual revenue has grown from $337 million in 2018 to over $6.4 billion in the last financial year.
Most importantly, Nu Holdings has grown its business profitably, moving from a net loss of $364 million in 2022 to a net profit of $1.5 billion in the trailing twelve months. We believe that its profitability growth will continue in the coming years since it has a gross profit margin of almost 100%.
The next important catalyst for the Nu stock price will be its earnings, which will come out this week. Analysts believe that its revenue will come in at $2.85 billion, 40% higher than in the same quarter in 2023.
Its forward revenue guidance for Q4’24 will be $3.1 billion, a 28% YoY growth. As a result, for the year, the company’s revenue growth will be 40% to $11.25 billion. Nu Holdings will then make $14.4 billion next year.
The company has a long record of doing better than what analysts expect. It has a record of over 90% since going public of beating these estimates.
Nu Holdings’ profits are expected to keep doing well. Analysts expect that its earnings per share will be 11 cents, an increase from 7 cents in the same quarter a year earlier. For the year, the EPS will be 43 cents.
Analysts have mixed Nu stock forecasts
Analysts have mixed opinions on the Nu Holdings stock price. Barclays analysts are overweight the company, while Susquehanna have a positive outlook. On the other hand, those at UBS and JPMorgan downgraded the stock to neutral.
The main concern that these analysts have is that Nu Holdings’ growth may start to slow in the coming years. Most notably, there are concerns about its valuation, which is quite stretched.
At $72 billion, Nu has a bigger market cap than Bank of New York Mellon and State Street, combined. Proponents, on the other hand, cite Nu’s growth trajectory and the fact that its business has a chance to gain substantial market share in the future.
Its most recent results showed that Nu Holdings had over 104.5 million users, a 20% growth from the same period last year. Its revenue surged by 65% to $2.8 billion.
Most notably, all its business segments did well, led by lending and credit cards, which maintained low default rates.
Therefore, while Nu is a highly overvalued company, it is justified by its low customer acquisition cost, which stands at $7. It is also growing its business and its margins.
Nu Holdings share price analysis
The daily chart shows that the NU stock price has been in a strong bullish trend in the past few years, and it recently rose to a record high of $16. By rising above that level, Nu invalidated the double-top pattern at $15.15, its highest level on September 18.
Nu Holdings has moved above all moving averages and the ascending trendline that connects the lowest swings since October 3.
Therefore, there are chances that the Nu share price will continue rising as bulls target the key resistance level at $20, which is about 32% from the current level.
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