In a noteworthy display of confidence in Nu Holdings Ltd (NYSE:NU), both SoftBank Group and the Saudi Arabia sovereign wealth fund made strategic moves in the first quarter of 2024. While SoftBank Group increased its equity stake in Nu Holdings from 22.0 million shares to 23.3 million shares, the Saudi Arabia sovereign wealth fund initiated a new position in the company, acquiring 1.18 million class A ordinary shares. These transactions, disclosed in regulatory filings on May 15, 2024, underscore the growing interest of institutional investors in the Brazil-based digital banking platform.
Established as a conglomerate encompassing three banks under the Nu brand in Colombia, Mexico, and Brazil, Nu Holdings has solidified its position as a key player in the Latin American financial landscape. With Brazil serving as its largest market, Nu offers a diverse array of services including credit cards, savings accounts, personal loans, insurance, and brokerage services to individuals. Additionally, the company provides point-of-sale solutions to small and medium-sized enterprises (SMEs) through NuTap, further expanding its reach and impact within the market.
The latest financial disclosures from Nu Holdings underscore its robust performance and growth trajectory. In its Q1 2024 earnings report, Nu reported an adjusted net income of $442.7 million, marking a substantial increase from previous periods. Revenue surged to $2.7 billion, representing a remarkable 66.7% year-over-year growth, surpassing analysts’ expectations by $170 million. Notably, Nu’s gross profit reached record highs, reflecting a 76% increase year-over-year, with a gross profit margin standing at 43.2%.
Moreover, Nu Holdings boasts a strong capital position, positioning itself as one of the best-capitalized entities within the regions it operates. With comfortable Capital Adequacy Ratios (CARs) well above regulatory minimums, coupled with substantial excess cash reserves totaling $2.4 billion, Nu Holdings exhibits resilience and stability amidst dynamic market conditions.
Having established a comprehensive understanding of Nu Holdings’ business fundamentals and recent developments, it’s essential to pivot towards technical analysis to glean insights into the stock’s price action and potential future trends. By examining key chart indicators and patterns, we can gain valuable insights into Nu Holdings’ stock performance and ascertain potential entry and exit points.
Surpassing the initial IPO high: A remarkable rebound
Nu Holdings was one of the most highly anticipated IPOs of 2021. With backing from the Oracle of Ohama, Nu priced its IPO at $9 per share and the stock closed its first day of trading at $10.33, which gave it a valuation close to $50 billion at the start itself. On the day of the listing, the stock made a high at $12.24.
However, immediately after the listing the stock started falling and crashed to sub-$4 levels by May 2022. After remaining range bound for close to a year, the stock started an upward journey in May 2023 that has lasted until now and has seen it surpassing its pre-IPO high and making a new high at $12.50 recently.
On the long-term daily charts, Nu Holdings is displaying exceptional upward momentum currently and if this momentum continues the stock can easily surpass $15 in the coming weeks. Investors and traders who are bullish on the stock can buy it at current levels while keeping a stop loss at $10.33 which is a 23.6% Fibonacci retracement level and is also close to the recent swing low at $10.43.
Traders who are bearish on the stock must avoid shorting it at current levels as long as the bullish momentum prevails. The first sign of bullish momentum fading would be the stock dropping below $10.33 where they can initiate a short position while keeping a stop loss at $12.55 and a profit target of $6.83.
The post Saudi sovereign fund and SoftBank driving Nu Holdings to new heights appeared first on Invezz