Fintech Speedster Nu Holdings: A High-Growth Potential Stock
A diverse range of investors, including aggressive growth investor Cathie Wood and Warren Buffett’s Berkshire Hathaway, have been drawn to Nu Holdings (NYSE: NU) since its IPO in 2021. Despite a recent 7% tumble in shares, Nu’s growth potential remains promising.
Berkshire Hathaway’s Move: A Closer Look
Berkshire Hathaway’s decision to reduce its stake in Nu Holdings by nearly 20% may seem concerning, but it’s essential to examine the bigger picture. Even after the recent drop, Nu’s stock has soared 69% this year and 245% since the start of last year. The value of Berkshire Hathaway’s Nu stake is 56% higher than it was at the start of this year and 197% greater than it was a year earlier.
A Solid Quarter, Despite Challenges
Nu Holdings’ third-quarter results were solid, with revenue topping $2.9 billion and adjusted income soaring 67% to $592 million. Although average revenue per active customer contracted, and net interest margin took a small step back, the company’s growth remains impressive. Nu now has 109.7 million accounts across Brazil, Mexico, and Colombia, with net growth of over 5 million during the third quarter.
Growth Investors Take Note
While value investors may be deterred by Nu’s high multiples, growth investors may see the stock as a bargain. Nu’s profitability, chunky margins, and expanding offerings make it an attractive option. The company’s growth costs money, but its bottom line continues to grow faster than its top line.
A Winner Despite Berkshire’s Sale
Warren Buffett’s sale of nearly a fifth of his stake in Nu doesn’t necessarily mean the stock is a loser. In fact, it may be a sign that Nu is a winner, and Berkshire Hathaway is redirecting its funds into fresh opportunities. As a Nu investor, there’s no need to feel discouraged.
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