Predicting the Future Position of Nu Holdings' Shares in the Next Three Years
Nu Holdings' shares might double again in 2024, following its 2023 success, but they've taken a 20% hit over the past three months, leaving a year-end gain of just 24%, underperforming the S&P 500. Ignoring temporary setbacks in favor of long-term perspectives might yield results.
On the positive side, Nu boasts impressive membership and revenue growth. The fintech added 20.7 million members in 2023, with Brazil, Mexico, and Colombia accounting for 98.8 million, 1.8 million, and 0.9 million, respectively. While Brazil still leads, Mexico and Colombia are growing quicker. And revenue? Birthing at 57% in Q4 2023, it's expected to rise further in Q1 2024, reaching 64%.
The company's eye on South Africa and the Philippines through Tyme Group could lead to additional growth opportunities. If successful, the move is likely to fuel expansion in other regions and countries.
Profits are soaring, with Q3 earnings shooting up from $303 million to $553 million. Its strategies to upsell and cross-sell, as well as its Brazilian success, serve as backbone for its global expansion. While not yet profitable in Mexico and Colombia, the revenues are substantial enough to facilitate growth in other regions.
Revenue growth exhibition:
56%
| Metric | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 ||--------------------|----------|---------|--------|---------|| Revenue growth | 57% | 64% | 65% | 56% |
Revenue growth
Credit performance, although affected by Brazil's high inflation, is holding strong. Loan origination increased 79% year over year, while deposits grew 60% and the interest-earning portfolio jumped 81% to $11.2 billion.
57%
However, financial stability within the Brazilian economy is crucial. While some volatility is expected, a general improvement is likely to enhance Nu's growth.
64%
After all, stock investment involves riding out market troughs and peaks. Buffett's sale, stubborn inflation, and an unexpected acquisition spooked markets, but Nu's strong management, stellar performance, and remarkable long-term prospects offer a compelling case for investors. Moreover, Nu Holdings shares trade at just 13 times forward one-year earnings, making this a potential bargain and a promising investment opportunity for the future.
65%
Despite the temporary setback in Nu Holdings' share price, long-term investors might find this as an opportunity to invest more in the fintech company, considering its strong financial performance and growth prospects in various regions. The company's focus on South Africa and the Philippines could lead to additional growth opportunities, potentially fueling expansion in other countries.
Investors might be attracted to Nu Holdings' share price, which trades at a relatively low multiple of forward one-year earnings, despite its impressive financial performance and promising growth prospects in the finance sector.