Nubank’s shares close January with a fall of over 20%; understand

Even with a strong rise of almost 10% this Monday (31) marked by investors’ greater appetite for risk, Nubank’s shares traded on the New York Stock Exchange (NYSE), in the United States, could not escape a month of January quite negative. The papers registered a devaluation of 20.8% in the first month of the year.

When it debuted on the American Stock Exchange in early December, the fintech was valued at around US$ 41.5 billion (R$ 222.3 billion) by investors, which made it appear at the time as the most valuable financial institution in the world. Latin America in market value, surpassing the Itaú and Bradesco conglomerates.

With fintech shares falling since then, however, Nubank’s market cap dropped to $34.2 billion on Monday, down $7.3 billion. 39.1 billion).

The decline made the digital bank overtaken in recent weeks as the financial institution with the highest market value by Itaú (US$ 43.5 billion, R$ 233.02 billion) and Bradesco (US$ 38.1 billion, R$ 204, 1 billion).

Even so, a survey by Economatica shows that, at the end of January, Nubank was positioned as the tenth most valuable company in Latin America, with Petrobras (US$ 82.8 billion) and Vale (US$ 73. 8 billion).

“We understand that the downward movement of Nubank’s shares is much less related to the company’s performance expectations and more to the market dynamics for technology shares in general”, says José Augusto Albino, founder of the specialized asset manager in technology Catarina Capital.

He recalls that the US stock exchange Nasdaq, known for its high concentration of shares in technology companies, dropped 9% in January. The losses were partially mitigated by the high of 3.4% on Monday.

The technology sector has suffered in different countries, especially with high inflation, which forces central banks to signal the beginning of tightening fiscal and monetary conditions.

The high competition environment provided by American big techs and large retail chains has also penalized technology companies that are still in the process of consolidating in the market.

The increase in Chinese government regulation of companies in the country’s sector has also contributed to clouding the assessment of experts.

In Brazil, the increase in interest rates already in progress and its consequent impact on the expenses of commerce and services companies, which use the system massively, as well as the advancement of other payment alternatives, such as Pix, and the of new companies in this sector, such as Magazine Luiza, which launched MagaluPay.

However, despite all the challenges, if Nubank delivers what is expected of it in the next earnings reports, the papers should quickly return to present an outstanding positive performance, as could already be seen this Monday, says Albino.

“It is an expected and natural volatility for this company profile, of technology with high potential for future growth”, says the manager of Catarina Capital.

With the first balance sheet after having made the IPO expected for mid-February, Itaú BBA analysts estimate that Nubank should present total revenue of approximately R$ 2.6 billion in the fourth quarter of last year, which would represent a growth of 28% in comparison with the immediately previous quarter.

The bank’s analysts predict that the digital bank should have a profit of approximately R$ 200 million in the period, although they recognize that it has low visibility regarding the numbers of the fintech’s first quarterly balance sheet.

Partner and analyst at Nord Research, Danielle Lopes points out that investors will be attentive to the numbers, especially to know if Nubank has been able to monetize its extensive customer base.

“Nubank has a large customer base [de aproximadamente 48 milhões de pessoas] that was captured with the promise of low rates and now they need to start monetizing. And the market is a little afraid if the company will be able to do that, because the promise will change completely”, says the expert, adding that the global macroeconomic environment, with interest rate hikes by the Federal Reserve, still adds a pressure factor. more for the business.

Technology companies are characterized by requiring high levels of investment to gain scale and market share, until they reach profitability in the future.

However, with higher interest rates expected for the next few years on a global scale, investors began in the middle of last year to review the models outlined for the growth of these businesses. This review should intensify in the coming months, says the Nord analyst.

“Technology companies have suffered a lot and we should expect the macro scenario to bring a lot of volatility to the sector’s papers this year”, says Danielle.

Rodrigo Crepi, an analyst at Guide Investimentos, adds that, although Nubank is expected to show positive results in 2022, the level at which the shares were priced in the initial offering on the US Stock Exchange has been questioned by some investors.

“Nubank’s narrative is interesting, but the multiples in which the shares were priced in the offer were very stretched and I think this is the main factor that has been putting pressure on the price of the paper”, says Crespi.

“Nubank has many achievements and growth potential, but the valuation of the shares leaves no room for misunderstandings. We see a structural challenge for the potential for monetization of clients in Brazil and we expect a cycle of increased delinquency ahead that could bring difficulties for the fintech’s newly formed customer base”, point out the analysts of Itaú BBA, which has an “underperform” recommendation (performance below the market average), with a target price of US$ 8 for Nubank’s shares in December 2022 .