Brazil-based digital bank Nu Holdings met earnings expectations for the third quarter late Wednesday. Nu stock, owned by Warren Buffett, fell on Thursday.
Nu Earnings Nearly Double, Sales Jump
For Q3, Nu posted earnings of 11 cents per share, in line with views, and nearly doubling from six cents a year ago.
Revenue jumped 38% year over year, to $2.94 billion, beating FactSet estimates for $2.61 billion. However, growth slowed from a 52% gain in the prior second quarter.
During the three months ended on Sept. 30, Nu added 5.2 million customers. Gross profit margin expanded to 46% from 43%. Net interest income surged by 43%.
But net interest margin at 18.4% shrank vs. both a year ago and vs. the prior second quarter. And operating expenses swelled 24%, driven by marketing costs.
Analysts project full-year earnings per share of 42 cents, a 74% increase from 2023, FactSet shows.
Nu Stock Tests Key Level
Shares shed 2.9% to 15.19 in big volume in Thursday's stock market action. But Nu stock trimmed sharper intraday losses to 14, finding support at the 50-day moving average.
On Tuesday, Nu Holding shares had hit a fresh post-IPO high.
IBD had named Nu as Stock Of The Day as it broke out to highs on Oct. 28.
Warren Buffett, Cathie Wood Own Brazilian Fintech
Nu Holdings touts itself as the fourth-largest Latin American bank by number of customers, 109.7 million reported at the end of Q3. Nu says it's using data and technology to create a digital banking platform that is transforming people's lives.
Reuters reported Nov. 7 that Brazil's central bank has been raising interest rates at an accelerated pace, amid high inflation. Higher rates generally boost net interest income.
Nu stock saw wild swings after its U.S. initial public offering in December 2021. But the financial technology company has delivered positive earnings every quarter since the third quarter of 2022, according to FactSet.
Both Warren Buffett and Cathie Wood own Nu stock, though they are very different types of investors. The company is a top-10 holding in Buffett's equity portfolio.
Wood also owns MercadoLibre, a Latin American online retail play. Last week, MELI stock sank amid earnings, but found support at the 200-day line.
Shares gave up 2.9% on Thursday.
