Shares of Nu Holdings (NYSE:NU), the parent company of Warren Buffett-backed fintech startup Nubank, are up 10% in pre-market Tuesday after the company reported results for the first quarter that beat the average analyst estimate.
Revenue came in at $877.2 million to smash the Street estimate of $630.9 million. An adjusted net loss was reported at $10.1 million to beat the expected loss of $12.4 million.
Nubank reported 59.6 million clients, representing a client addition of 5.7 million.
The Q1 earnings report showed that strong growth continues for Nubank, said Citi analyst Ashwin Shirvaikar.
“While investors are concerned about the resulting risk (rising credit loss provisioning, rising NPLs and delinquencies), the company addressed these – as expected, ECL accounting, post-pandemic credit normalization and seasonality are the driving factors for much of the change. The bigger question of comfort level to continue to pursue aggressive growth was also asked – we are unsure if the company's answer of “historical track record” will fully satisfy every investor. We do expect solid growth to continue at NU and look for continued market and wallet share gains,” Shirvaikar said in a client note.
BofA analyst Jason Kupferberg said “there was much to like” in Nubank’s Q1 results, including “a continuation of strong client acquisition and engagement, as well as operating leverage gains, which supported a bottom line beat.”
“However, asset quality deterioration was sharper than anticipated, reflecting change in mix, and led to higher than anticipated provision charges and lower reserve coverage, which seems to be the focus of the market at the moment. Given the upcoming lock-up expiry, NU's stock has been under significant pressure over the last three months (-52%), though NU noted on the call that a majority of shareholders will not be selling or distributing shares in the near future and expect to remain long-term holders of NU,” Kupferberg told clients in a memo.
By Senad Karaahmetovic