Nu Holdings stock price forecast after earnings: still a bargain?

Nu Holdings stock price jumped in the pre-market session on Friday as investors cheered its strong revenue growth and guidance. It jumped to a high of $13.18, up by almost 10% from its closing of $12. It has jumped by over 47% from its lowest level in April. 

Nu Holdings business is growing

Nu, a Warren Buffett-backed company, has become one of the top disruptors in the banking industry in Latin America. In less than 15 years, it has accumulated over 123 million customers in countries like Brazil, Colombia, and Mexico.

Its growth has been so strong such that it counts about 60% of the adult population in Brazil as customers. It also has room to grow as just 13% and 9% of the adult population in Mexico and Colombia are customers.

Financial results released this week showed that the revenue jumped to $3.6 billion in the second quarter, up from $2.8 billion in the same period last year. Its revenue was much higher than what analysts were expecting. 

Customers have grown across all its businesses. For example, its active credit card customers jumped by 11% to 55 million, while its crypto customers surged by 41% to 6.6 million. In all, its business attracted 4.1 million new customers during the quarter. The CEO said:

“These results come despite our ongoing investments in growth and, most importantly, in keeping our customers loving us fanatically, proving that it’s possible to scale efficiently, with discipline, and still generate strong earnings while building the foundation for the long-term.”

Read more: Nu Holdings Stock price is Soaring—Should you buy now?

Is Nu a good stock to buy?

One thing about Nu Holdings is that it is not a cheap company, as its stock has surged in the past few years. However, a closer look at is valuation metrics and its growth forecasts means that it is not all that overvalued, as it as a forward P/E ratio of 19 and a trailing multiple of 27.

Data shows that analysts are still optimistic in its business. The average estimate for the current quarter is that its revenue will be $4.03 billion, representing a 36% annual growth. 

Analysts predict that its full-year revenue will be $14.3 billion, representing a 24% increase year-over-year. It will then make $18.6 billion next year. 

The other bullish case for the company is the path for growth. For example, the Mexican and Colombian ratio of adult customers reaches that of Brazil, it will means millions in additional customers. 

It is likely that the ratio will continue to grow. It reached 12% in the last quarter, up from 2.7% in Q2’22.

Nu Holdings also has more room to grow in terms of services offerings. For example, its crypto business is still in its infancy, with more growth expected to happen.

The current Nu stock price of $12 is a few points below the average estimate of $14.8. The most optimistic stock estimate is $19.

Nu Holdings stock price analysis

NU stock chart | Source: TradingView

The daily chart shows that the Nu stock price was under pressure before its earnings. It was trading at $12, a few points above the key support level at $11.73. That was a sign that it was forming a double-bottom pattern, a popular bullish reversal pattern. 

It has now rebounded and moved above the 50-day and 100-day Exponential Moving Averages (EMA). Therefore, the most likely scenario is where it jumps to the key resistance level at $14, up by 16.9% from its closing price on Thursday. A drop below the support at $11.7 will invalidate the bullish forecast.

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