Nu Holdings’ stock price retreated slightly on Tuesday after the company’s revenue came out short of expectations. It fell by 3% in the extended hours, erasing the 1.50% gains made during the regular session.
Nu stock price was trading at $13.15, and is hovering at its highest level since February 20th. This price was about 45% above its lowest level this year, giving it a market cap of over $65 billion.
This article looks at whether the Nu share price will keep rising, and then identifies the potential targets.
Nu Holdings business continues to grow
Some ambitious technology-first companies are disrupting the banking industry. Nu Holdings, a Brazilian fintech company backed by Warren Buffett, has become the biggest neobank in the world with a valuation of $65 billion.
It also leads in the number of customers as it has expanded its solutions across the Latin American region. This geographical growth and the addition of more services in its ecosystem has led to a big increase in its revenues and profitability.
Nu Holdings had a net revenue of $453 million in 2020 and $5.5 billion in 2024, and analysts anticipate that it has more path for growth ahead. It moved from a net loss of $171.5 million in 2020 to a net profit of $1.97 billion.
Read more: Nu Holdings stock price is expensive; is it a good fintech to buy?
Growth continued in Q1
Financial results released on Tuesday showed that Nu Holdings business continued doing well in the first quarter. It had over 118.6 million users, a 19.3 million annual increase. That was a big increase since the company had less than 2 million customers in 2017.
Nu Holdings users | Source: Nu
Nu Holdings has room to grow its number of customers. For example, it counts 59% of Brazil’s adults as its customers, meaning it may reach 65% over time. Just 12% and 8% of Colombia’s adults are customers, implying that it has more room to catch up with Brazil’s figures.
Nu Holdings has also benefited from adding more solutions to its business. It now offers cards, SME credit, payroll loans, investments, insurance, and personal loans, among other solutions.
This week’s results showed that Nu Holdings’ business continued thriving as its revenue jumped by 40% to $3.248 billion. Its gross profit rose to $1.39 billion, while its net income rose by 27%.
Analysts anticipate that the company’s business will continue having double-digit growth in the coming years. The average revenue estimate for the current quarter is $3.37 billion, a 18% increase from what it made last year.
This growth will then propel its annual revenue to $13.5 billion this year, followed by $18.5 billion next year.
The average Nu Holdings stock price forecast by analysts is $14.12, up from the current $13.14.
Nu Holdings stock price analysis
Nu stock chart | Source: TradingView
The daily chart shows that the Nu stock price dropped to a low of $9 in April as most shares plunged. It then bounced back and flipped the important resistance level at $12, the highest swing on March 19.
The stock has moved above the 50-day and 200-day Exponential Moving Averages (EMA). Most importantly, oscillators like the Relative Strength Index (RSI) and the MACD indicators have continued rising. Oscillators rise when there is an upward momentum.
Nu stock has moved above the descending trendline that connected the highest swings since November last year. It also formed an inverse head and shoulders pattern.
Therefore, the Nu Holdings share price will likely keep rising as bulls target the next key resistance at $16, the highest point in November last year. This target is about 23% above the current level. A drop below the support at $10 will invalidate the bullish outlook.
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