TLDR:
- Nu Holdings (NYSE: NU) stock plunged 18.89% to $10.82 on Friday following Q4 revenue miss of $2.99B vs expected $3.17B
- Despite revenue growing 24.6% year-over-year and customer base expanding 22% to 114.2M, investors focused on contracting net interest margins
- Q4 net income grew 85% to $552.6M, while full-year profits doubled to $1.972B
- Stock declined for fifth consecutive day as investors showed concern over 17.7% contraction in net interest margins
- CEO David Vélez announced 2025 would be an investment year, focusing on expansion in Brazil, Mexico, and Colombia markets
Nu Holdings (NYSE: NU) experienced a sharp decline in its stock price on Friday, February 21, falling 18.89% to close at $10.82 per share. The steep drop came after the fintech company released its fourth-quarter earnings report, which showed mixed results and raised concerns about future growth prospects.
The company reported fourth-quarter revenue of $2.99 billion, falling short of Wall Street’s expected target of $3.17 billion. While this figure represented a 24.6% increase compared to the same period last year, the miss triggered a negative response from investors.
Despite the revenue shortfall, Nu Holdings demonstrated strong profit performance. The company’s fourth-quarter net income reached $552.6 million, marking an 85% increase from $298.2 million in the previous year. For the full year 2024, net income more than doubled to $1.972 billion from $983 billion in 2023.
The company’s customer base continued to expand, adding 4.5 million new users in the fourth quarter. This brought the total customer count to 114.2 million, representing a 22% increase from the previous year. Purchase volume also showed positive momentum, rising to $32.2 billion from $30.9 billion in the third quarter.
However, investors appeared more focused on concerning indicators within the report. The company’s net interest margin contracted for the second consecutive quarter, declining by 17.7%. This compression was primarily attributed to foreign exchange volatility and the company’s deposit strategy in Mexico and Colombia.
Nu Holdings’ adjusted earnings per share came in at $0.12, meeting analyst expectations. However, the combination of the revenue miss and margin pressure overshadowed this achievement in investors’ minds.
The sell-off intensified as CEO David Vélez announced that 2025 would be “another big investment year” for the company. Nu Holdings plans to concentrate on expanding its infrastructure and customer base in its key markets of Brazil, Mexico, and Colombia.
The stock’s decline occurred during a broader market downturn, with major indices recording losses. The Dow Jones fell 1.69%, the S&P 500 dropped 1.71%, and the Nasdaq declined 2.20% on the same day.
The trading session marked the fifth consecutive day of decline for Nu Holdings’ stock, reflecting growing investor concern about the company’s near-term prospects.
Market reaction appeared particularly focused on the revenue shortfall despite increased purchase volume, suggesting potential weakness in the company’s pricing power.
Latin American Expansion Plans Raise Cost Concerns
The company’s expansion strategy in Latin American markets, while potentially beneficial for long-term growth, may impact short-term profitability as investment costs rise.
Nu Holdings maintains a strong market presence with its digital banking services, having built an impressive scale of operations across its target markets.
The stock’s movement reflected in part the broader market’s current sensitivity to growth stock earnings, particularly in the fintech sector.
Trading volume remained high throughout the session, indicating strong investor interest and participation in the stock’s price movement.
The company’s future performance will likely depend on its ability to balance growth investments with profitability while maintaining competitive pricing in its key markets.
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