Nu Shares Slump on Q4 Results, a Canary to Still-Private Fintechs

Nu Shares Slump on Q4 Results, a Canary to Still-Private Fintechs

NU, the parent company of Nubank, a well-known Latin American neobank, released its fourth-quarter and 2021 financial results last evening, much to the dismay of investors. Nu shares have fallen from a high of the north of $12 per share last year in a huge offering – the business is listed on the New York Stock Exchange and a local bourse – to just under $9 per share before it disclosed its results. 

Nu’s stock soared in early morning trade today as a result of the company’s earnings announcement, but by the time normal trading began, the stock had sunk to a loss of roughly 9%. According to Yahoo Finance, Nu is still worth about $37 billion this morning, despite recent dips.

Nu’s IPO was a watershed moment for the booming neobanking sector, which has seen a slew of entrepreneurs raise massive sums of money to construct consumer-friendly digital banking services. It gave an early response to the question of how the value of still-private neobanks might be converted to public markets.

Despite some early challenges, investors appear to be encouraged by the company’s fourth-quarter results. Let’s go over the numbers and then talk about what they indicate for Chime and other neobanks on the verge of launching their own IPOs.

In Q4 2021, Nu made $635.97 million in revenue, up from $202.57 million the previous quarter. On a forex-neutral basis, Nu’s sales increased 224.3 percent year over year in the fourth quarter of 2021. That was a speedy response.

The company’s revenue is divided into two categories. The company’s interest-derived income was $439.55 million in the most recent three-month period, while the top-line from “fee and commission income” was $196.42 million.

Interest expenses, transaction charges, and credit losses are the company’s three main costs. In total, these costs amounted to $409.08 million in the fourth quarter, leaving Nu with a gross profit of $226.89 million.

The neobank, or digital bank, phenomena continues to sweep the globe, with global winners ranging from Brazil’s Nubank, valued at $10 billion, and Berlin’s N26, valued at $3.5 billion, to Chime, the most valuable consumer fintech in the United States, currently valued at $14.5 billion.