Nu Holdings (NU) shares are down about 22% in pre-market trading (around $11.77) after Luiz Inácio Lula da Silva won Brazil’s presidential runoff on Sunday, beating Flávio Bolsonaro 51.8% to 48.2%.
The drop wipes out more than the election rally. Nu closed at $13.43 on October 2, before Bolsonaro’s first-round upset sent it higher, and the stock now sits about 12% below that level. Roughly $16.4 billion of market value is gone since Friday’s $15.16 close.
What Changed Overnight for Nu
- Dollar futures jumped about 10% against the real, and Bloomberg reported traders bracing for steep losses across Brazilian markets.
- Bolsonaro has refused to concede (according to Reuters), so political noise may linger.
- Itaú Unibanco (ITUB) and Banco Bradesco (BBD) are falling too, after gaining 15% and 19% on the first-round result.
- The selloff hits a business coming off its best quarter: $1.06 billion in net income and a 33% return on equity.
What the Real and Rates Mean for Nu
Nu reports in dollars, and about 118 million of its 139 million customers are in Brazil. If the dollar holds a 10% gain against the real, each real Nu earns there is worth about 9.1% less in dollars. Customer share isn’t profit share, so the company-wide hit will only show in results.
Higher Brazilian rates cut both ways. Float income, which rises with rates, brought in $1,454.4 million of Nu’s $5,875.7 million in second-quarter revenue, but deposits cost Nu 88% of interbank rates, and pricier credit can push up bad loans.
Nu traded at 15.79x forward earnings on Friday, already well below its 21.52x average since late 2023 and its 31.52x peak. Today’s 22% drop, before analysts touch their estimates, pushes it back toward its 12.21x low from this spring.
TIKR Tracks 22 Analysts on Nu Holdings. How Many Say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Nu Holdings, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Nu Holdings’ Analyst Ratings
Where Wall Street’s Nu Targets Sit Now
The mean target of $18.92 sits about 61% above the pre-market price, but those targets predate the vote.
The market is pushing Nu toward its cheapest valuation since late 2023. Whether it deserves that depends on whether higher Brazilian rates lift Nu’s asset yields faster than its funding costs and bad loans. Third-quarter results predate the vote, so management’s outlook on the third-quarter call matters more than the numbers.
So What Is Nu Stock Actually Worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what NU stock could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
