Retail sentiment soared on Stocktwits, increasing from ‘bearish’ a day ago to ‘extremely bullish.’
Shares of Nu Holdings ($NU), which operates Nubank, fell over 7% on Thursday after the company reported third-quarter earnings that largely fell in line with Wall Street estimates. Retail sentiment, however, was ‘extremely bullish’ on the stock.
The firm’s earnings per share (EPS) came in at $0.11, roughly in line with analysts’ consensus estimate. Revenue of $2.94 billion, however, beat the expected $2.57 billion.
The revenue growth was driven by adding new customers and better engagement efforts such as cross-selling and up-selling initiatives. Net interest income increased 63% year-on-year.
Nu added 5.2 million customers in the third quarter, reaching a total of 109.7 million customers as of Sept 30, reflecting a 23% year-on-year rise. In Brazil, its customer base has surpassed 100 million, the company said.
Retail sentiment soared on Stocktwits, increasing from ‘bearish’ (27/100) a day ago to ‘extremely bullish.’ (96/100). Message volumes were at ‘extremely high’ levels.
“Our third quarter 2024 underscores the strength of our business model, demonstrating top-line growth and sustained profitability,” David Vélez, founder and CEO of Nubank, said in a statement, adding its expansion into Mexico and Colombia continues to generate impressive results as it targets more than 11 million customers in both countries combined.
Velez noted the company is “going beyond financial services” as it makes progress in its execution.
On Thursday, Susquehanna analyst James Friedman raised the firm’s price target on Nu Holdings to $18 from $16 while keeping a positive rating on the shares. The firm cited continued strong consumer loan originations among factors, The Fly reported.
KeyBanc, meanwhile, raised its price target to $17 from $15 and kept an ‘Overweight’ rating on the shares. The firm notes Nu reported Q3 revenue/gross profit “a hair below its estimates and below the Street to a greater extent.”
The brokerage said it would characterize the results as “mixed” and paint the print as “messier than usual” with the combination of higher credit origination activity and a downtick in net interest margin driving the need for extra explanation.
Nubank’s rapid growth in Latin America has attracted the attention of Warren Buffet. Berkshire Hathaway reportedly invested $1 billion in its initial public offering (IPO) in 2021 and continues to back the company.
NU stock is up 77.3% year-to-date.
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