Is It Too Soon to Call a Bottom on Nu Holdings Stock?

This week is not going well for me and my fellow Nu Holdings (NYSE: NU) investors. Shares of NuBank’s parent company hit a fresh 52-week intraday low on Tuesday. The stock has fallen 9% over the first two days of the trading week, a contrast to the back-to-back days of slight market upticks.

Nu and several Latin American fintech stocks have fallen out of favor lately. Nu Holdings shares have plummeted nearly 30% so far in 2026. You can blame economic instability and intensifying competition as factors for the cooling, but this week the catalyst for the markdown is pretty clear. Nu has a new CFO, and that was enough to have two major analysts downgrade the Brazilian fintech leader.

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Out with the old, in with the Nu

Bank of America analysts led by Mario Pierry downgraded Nu Holdings stock on Tuesday, from neutral to underperform. The firm wasn’t bullish before, but now Pierry is solidly bearish on the stock’s near-term prospects. Adding insult to injury, he’s slashing the price target from $16 to $10, lower than where the stock began trading on Wednesday, even after the Tuesday sell-off.

The knock on Nu centers primarily on the surprise switch of its CFO. Guilherme Lago — who had been CFO since 2021 — is leaving the company. He was instrumental in taking Nu public later that year and ushered in the financial discipline that helped Nu deliver rapid and high-margin growth.

His replacement isn’t chopped liver. Rob Livingston was Visa‘s CFO for North America, its largest business. His three decades of experience spanned primarily across North America, Europe, and Asia. It’s not Latin America, but with Nu’s recent application for U.S. banking charter — and after securing naming rights for Miami’s Lionel Messi-led Major League Soccer stadium — North American expansion is inevitably part of its future.

A world of opportunity

Pierry’s concerns go beyond just the change for a key executive role. BofA is concerned about rising credit concerns in Brazil, heightened competitive pressures, and how rising loss provisions will squeeze Nu’s net margin. These are all legitimate knocks, but BofA had already lowered its price target from $17 to $16 just two weeks ago due to concerns about contracting profitability.

The gray clouds find Pierry resetting BofA’s valuation. He feels that Nu should be trading closer to 13 times forward earnings, down from his previous benchmark of 18.

He’s not the only one taking a more critical look at Nu. Susquehanna downgraded the stock from positive to neutral on Wednesday, lowering its price target from $18 to $13. Susquehanna echoes the operating margin contraction that Nu reported last month in its first-quarter results. Costs associated with growing its already massive credit card customer base in Brazil and expanding deeper into Mexico are cooling the once high-flying fintech.

The good news here is that Nu is still growing. Last month’s first quarter is better than the recent rise of boo birds may suggest. Revenue jumped a better-than-expected 42% with net income climbing a respectable 41%. The days of Nu’s bottom line outpacing its top line may be in the past in the short run, but Nu keeps growing.

Nu is currently trading for 14 times this year’s earnings and less than 11 times next year’s analyst profit target. Fintech stocks understandably trade at a discount to market multiples, but Nu is growing faster than most businesses in this space.

The expansion into North America and beyond will weigh on the already contracting margins, but Nu’s home turf of Brazil remains a cash cow, with growing average revenue per user and stable servicing costs.

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Bank of America is an advertising partner of Motley Fool Money. Rick Munarriz has positions in Nu Holdings. The Motley Fool has positions in and recommends Nu Holdings and Visa. The Motley Fool has a disclosure policy.

Is It Too Soon to Call a Bottom on Nu Holdings Stock? was originally published by The Motley Fool

Fonte do Artigo
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