Nu Holdings stock price has staged a strong comeback in the past two months as demand jumped and investors bought the dip. The stock jumped to a high of $13.65 this week, its highest level since February 18. It has soared by over 50% from its lowest level in May this year.
Why Nu Holdings stock price has surged
Nu Holdings is a Brazilian technology company that has successfully disrupted the financial services industry. The company operates the largest neobank in the world, with a market capitalization exceeding $65 billion.
Its main product is a mobile application that provides its customers with most money-related services. Users can deposit funds and earn interest, take loans, and get credit cards easily.
It has grown rapidly in the past few year, such that it now serves about 59% of Brazil’s adult customers. It has also added over 118 million customers from countries like Mexico and Colombia, and its goal is to venture into other countries gradually.
Nu Holdings stock price has jumped because of the ongoing business growth trajectory. Its annual revenue has soared from over $382 million in 2020 to $9.6 billion in the last financial year, representing a growth rate of 2,413%.
Nu’s growth accelerated this year as evidenced by its revenue and profitability growth. The results showed that Nu’s active customers jumped by 16% in the first quarter to 98.7 million.
This, in turn, led to a surge in interest-earning portfolio, which jumped by 62% to over $13.8 billion. Most importantly, the company has become highly profitable, with its quarterly net income rising to $557 million.
Key markets are still early
Nu Holdings stock price has jumped because analysts expect that most of its top markets were still early and that it had a long runway for growth. For example, the company has a gross profit market share of just 6% in Brazil.
It also has less than 1% of the market share in payroll loans, and SME credit. The same is true with other segments like cards, retail deposits, payments and investments.
Its market share in other markets like Mexico and Colombia is also significantly low. For example, while it has a 59% market share of Brazil’s adult population, the same number is 12% in Brazil and 8% in Colombia.
Analysts are optimistic that the company has more room to grow in the coming years. The average estimate is that its second-quarter revenue will be $3.78 billion, up by 32% from the same period last year.
They also expect its annual revenue to be $14.7 billion, up 28.27% from last year. Its revenue will hit $18.4 billion next year. Still, judging by history, it is likely that the company’s growth will exceed expectations.
Nu Holdings share price analysis
The daily chart shows that the Nu share price bottomed at $8.98 in May and then bounced back to $13.65. It has formed an inverse head-and-shoulders pattern, a popular bullish reversal pattern.
The stock has moved above the 50-day and 100-day moving averages. Also, the Relative Strength Index (RSI) and the MACD indicators have all pointed upwards.
Therefore, the stock will likely continue rising as bulls target the key resistance level at $16.15, its highest point in November last year. This price is about 20% above the current level. A move above that level will point to further gains to $20.
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