Nu Holdings Ltd. shares posted a modest gain on Tuesday, rebounding from recent lows even as Citigroup issued a downgrade citing persistent credit and margin risks. The stock closed up 2.33% at $12.72, before slipping to $12.70 in after-hours trading. Trading volume reached approximately 59.4 million shares.
The move came against a mixed backdrop on Wall Street, where the Nasdaq Composite and S&P 500 both declined, pressured by technology shares, while the Dow Jones Industrial Average closed at another record high, according to Reuters. Nu's advance appeared to be a stock-specific bounce rather than a broad market move.
Citigroup downgraded Nubank to Neutral from Buy on June 15, slashing its price target to $13 from $18. The bank cited concerns over credit quality, profit per loan, and the upcoming CFO transition in July. The downgrade highlights ongoing worries about Nubank's heavy reliance on credit cards and personal loans, which could face pressure if consumers have less disposable income after meeting other obligations.
Despite Tuesday's gain, Nu stock remains down 24.01% for the year as of the close, according to MarketScreener. The shares have clawed back 9.66% over the past five sessions, but the longer-term trend remains negative.
Among Brazilian financial peers, Itaú Unibanco's U.S.-listed shares were little changed, while Bradesco fell about 0.4% in New York trading. Nu outperformed both, but the relative strength was not enough to alleviate persistent questions about its credit performance, profit margins, and the costs of its expansion strategy.
Nu's board authorized a $1 billion share buyback program on June 4, covering up to $1 billion of Class A shares over the next year. While buybacks can support per-share metrics, they do not obligate the company to make any purchases.
The company continues to pursue growth. First-quarter revenue hit a record $5 billion, and the customer base surpassed 135 million. Return on equity stood at 29%. Founder and CEO David Vélez described the quarter as “another strong quarter.”
However, risks remain. BofA Securities analyst Mario Pierry noted that outgoing CFO Guilherme Lago was “one of the company’s most important executives,” and that the timing of the transition “adds uncertainty.” Higher credit costs in Brazil, or larger cash requirements in Mexico, Colombia, or the U.S., could quickly erase Tuesday’s gains.
Nu announced that Rob Livingston, formerly of Visa, will take over as CFO on July 13. Lago will serve as a special adviser during the transition through August 31.
