Nu Holdings (NYSE:NU) is down significantly following its Q4 2024 earnings report. It is now down nearly 16% since then. Has Wall Street gone overboard with the selloff? Here’s what you need to know:
NU stock fell sharply after it reported $2.99 billion in Q4 revenue. Analysts expected $3.29 billion. This marked a sequential slowdown in revenue growth to just 2%. Net interest margin (NIM) declined 70 bps to 17.7%, though the company blamed foreign exchange volatility.
Full-year revenue grew 58% year-over-year to $11.51 billion, but monthly average revenue per active customer fell to $10.7 from $11.4 in Q1 2024. GAAP net income rose 85% year-over-year to $552.6 million but missed estimates by $13.8 million.
Nu did add 4.5 million customers in Q4 and its customer count reached 114.2 million globally after growing 22% year-over-year. It is now the third-largest financial institution in Brazil by customer count.
Analysts still expect Nu to post 31.4% EPS growth in 2025 and 43% EPS growth next year, along with revenue growth of 34% for the full year and 23.8% next year. You’re currently paying 25 times forward earnings for this stock and over 4 times forward sales. That’s expensive, but there’s still room for the stock to move higher if it can execute well from here.
Nu’s long-term growth potential in underbanked Latin American markets remains intact, and if the U.S. dollar starts to cool off, we could see the stock recover significantly. Under Trump, that may happen in the coming years since he has said many times before he wishes to see a weaker U.S. dollar to promote exports. Buying NU stock for the long run isn’t a bad idea.
The consensus price target of $15.8 implies 39.8% upside potential.
