Equity stake in Nu Holdings, a leading digital financial services platform provider (New York Stock Exchange: NU), down more than 55% over the past year. Given the massive drop, Nu Holdings is now a penny stock. NU stock has lost considerable value, but Wall Street analysts remain bullish on their outlook, seeing solid upside potential based on analysts’ average price targets.
Can I buy NU now?
Nu Holdings is primarily focused on the Brazilian, Mexican, and Colombian markets. Given short-term macro headwinds, mainly from rising interest rates, NU is seeing a slowdown in personal loan growth.
It’s worth noting that NU personal loans grew 400% in the first quarter. Meanwhile, Q2 and Q3 growth slowed to 250% and 111%, respectively. In addition, personal loans continued to decline in the third quarter. In addition, delinquency rates are rising due to financial problems.
The challenging macro environment and challenges from rising interest rates continue to limit NU gains in the short term. However, our ability to grow our customer base and increase interest in our revenue portfolio provides a solid platform for long-term growth.
A growing active customer base, higher revenue per customer, and lower operating costs for the platform are good signs of long-term profitability. In addition, management expects net interest margins to improve as loans continue to grow faster than deposits and funding costs are optimized.
The NU stock has a strong buy consensus rating on TipRanks, based on 5 buy recommendations and 1 sell recommendation. On the other hand, NU’s $7.35 price target implies a 101.92% upside potential.
Conclusion
Near-term macro headwinds may keep NU stocks volatile in the short term. However, its focus on growing its customer base, expanding its loan portfolio, and driving operating leverage could support its stock price over the long term. Nu Holdings is an attractive long-term penny stock, but investors can use his TipRanks Penny Stocks Screener to find more companies likely to offer solid returns.
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