Nu Holdings Ltd. (NYSE: NU) ended Friday's trading session at $12.73, a decline of 3.27% for the day, as the digital banking giant faced profit-taking after a strong midweek rally. Despite the pullback, the stock still posted a weekly gain of approximately 4.4%, climbing from last Friday's close of $12.19. The dip came as U.S. markets prepared for a long Memorial Day weekend, with trading resuming on Tuesday.
The company, parent of Brazilian fintech Nubank, reported first-quarter results earlier this month that showcased record profitability. Net income reached $871.4 million, up sharply from $557.2 million in the year-ago period. Total IFRS revenue hit $4.97 billion, while managerial revenue—adjusted by the company—crossed $5 billion for the first time, reaching $5.32 billion. CEO David Vélez highlighted that the quarter ended with more than 135 million customers, with Brazil contributing over 115 million, Mexico over 15 million, and Colombia nearly 5 million.
However, beneath the top-line strength, credit quality metrics are drawing scrutiny. The company's 15- to 90-day non-performing loan ratio, an early indicator of potential defaults, rose to 5.0% in the first quarter, up from the prior period. Loans overdue by more than 90 days declined to 6.5%. Credit-loss allowances surged 33% quarter-over-quarter to $1.79 billion, while the risk-adjusted net interest margin slipped to 9.5% from 10.5%.
Chief Financial Officer Guilherme Lago sought to allay concerns during the earnings call, stating that provisions "do not indicate any sign of credit deterioration" and describing the balance sheet as "fairly robust." Nonetheless, analysts remain cautious. Goldman Sachs' Tito Labarta questioned management about exposure to lower-income borrowers, calling it "part of the concern." BTG's Eduardo Rosman noted a divergence between local and foreign investors, with Brazilian investors appearing "much more constructive" than their international counterparts.
The broader Latin American fintech sector also faced headwinds on Friday. MercadoLibre, operator of Mercado Pago, slipped alongside StoneCo and PagSeguro, both of which have significant exposure to Brazil's payments market. The weakness appeared sector-wide rather than company-specific, but it added to the pressure on NU shares.
Looking ahead, traders are watching Tuesday's open for directional cues. A move above Thursday's close of $13.16 could signal renewed buying momentum following the earnings rebound. Conversely, a break below Friday's low of $12.71 may shift attention to the May 15 low of $11.78, reigniting questions about credit risk and the sustainability of growth.
This week also brings the release of PCE inflation data, a key gauge for the Federal Reserve. A higher-than-expected reading could keep rate hike concerns alive for growth stocks, though Nu's primary operating risks remain centered in Brazil, Mexico, and Colombia.
For now, investors are weighing Nubank's record revenue and profit against rising credit costs and a more cautious outlook on asset quality. The next few sessions will be critical in determining whether the stock can hold its gains or if sellers will take control.
