Stock market drawdowns are stressful. You are bombarded with news headlines about how the world is ending, markets are in turmoil, and why now is the time to sell.
Nu Holdings (NU -1.97%) stock lost 19% of its value in February, according to data provided by S&P Global Market Intelligence. The stock dropped after its fourth-quarter earnings report, which demonstrated strong performance but negative sentiment about new growth plans and the economy in Brazil.
Expectations tend to play an outsized role when it comes to quarterly earnings. And missed expectations are likely what affected Nu Holdings' (NU -2.02%) stock price after its Q4 release.
There are many stocks on the market today that have created millionaires. It all depends on how much you start with and how long you wait.
Great growth stocks rarely go on sale. But that seems to be the case right now with Nu Holdings (NU -2.60%).
Great companies rarely go on sale. That's especially true for great companies that are growing quickly.
Zacks.com users have recently been watching Nu (NU) quite a bit. Thus, it is worth knowing the facts that could determine the stock's prospects.
Nu Holdings Ltd.'s NU shares tanked 18.9% on Friday after discouraging fourth-quarter results.
Nu Holdings (NU -18.89%) investors ended this past trading week on a downtick. The fast-growing Brazilian fintech stock plummeted 19% on Friday after the company posted a disappointing financial update.
Nu Holdings' stock dropped 19% despite strong earnings, mainly due to macro challenges in Brazil, not business fundamentals. Q4 earnings showed impressive FX-neutral growth: 50% YoY revenue, 23% ARPAC, and 75% interest-earning portfolio. Management's strategic risk-taking and growth in Mexico and Colombia mitigate Brazil's macroeconomic headwinds.
I remain concerned about three consecutive quarters of NIM contraction, driven by FX headwinds, secured lending growth, and rising deposit costs in Mexico and Colombia. I believe Nu's strategic move toward secured lending and higher income customers could be an early sign of increased macroeconomic headwinds in Brazil. The stock is now near a support level, and if it breaks lower, I expect a drop to the low $8 range. However, it's too early for a sell rating.
Nu Holdings' Q4 earnings weren't favorable, causing the stock to drop by double digits and bringing a great opportunity to buy the dip. The significant depreciation of the Brazilian currency made Nu's financial growth considerably lower in US dollars, but the company continued with high growth in local currency terms. With a forward PE of 20.4x and a PEG ratio of 0.90x, Nu's valuation is now more attractive than ever, justifying a strong buy rating.