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Nu Holdings stock surge accelerates as bulls eye a 15% upside

By: Invezz

Nu Holdings (NYSE: NU) stock price continued its strong uptrend this week as demand for the shares jumped following its earnings report. The stock surged to a high of $10.73, its highest point since February 2022. It has risen by over 226% from its lowest point in 2023, giving it a market cap of over $48 billion.

Strong growth and profits

Nu Holdings, the South American digital bank backed by Warren Buffett, is doing well as it continues gaining market share in the region. 

This view was confirmed last week when the company published strong financial results that revealed its customers jumped by 5 million to 93.9 million. Most of these customers came from Brazil. Nu had less than 2 million users in 2017.

Nu Holdings active customers

Nu Holdings active customers

The company is also gaining market share in other countries like Mexico and Colombia. As a result, its total revenue jumped by 65.80% YoY to $2.4 billion in the fourth quarter. For the year, its total revenue surged to $8 billion from the previous $4.7 billion. 

Most importantly, the company has shifted to profitability as its gross profit surged to over $3.4 billion in 2023. Net income came in at over $1 billion, a major improvement since it had a loss of $9 million a year earlier.

These results mean that Nu Holdings has succeeded where many neobank companies have failed in the past decade. Most of them have struggled to become profitable even as interest rates have remained at an elevated point.

Nu Holdings has more room to grow because of the vast population in its key markets. Brazil has a population of more than 214 million while Mexico has over 126 million. This means that it has captured just a small share in these core markets and the growth may continue.

The company has more room to monetize its large customer base. For example, the number of active credit card customers has risen by 21% to over 40.6 million. Active unsecured lending customers has soared by 40% to 7.1 million. 

Nu Holdings stock price forecast

NU chart by TradingView

Turning to the weekly chart, we see that the Nu Holdings share price formed a double-bottom pattern around the $3.50 level in 2022 and 2023. It crossed the neckline of this pattern at $5.84 on May 15th last year.

The stock has remained above the 50-week and 25-week moving averages, a pointer that bulls are in control. Most recently, it has jumped above the psychological level of $50 while the Average Directional Index (ADX) has risen.

Therefore, the outlook for the stock is bullish, with the next important point to watch being at $12.21, its all-time high. This means that the stock has a 15% upside from the current price.

The post Nu Holdings stock surge accelerates as bulls eye a 15% upside appeared first on Invezz

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