Nu (NU +0.92%) stock is seeing big sell-offs in Friday's trading. The fintech company's share price was down 15.2% as of 11:30 a.m. ET and had been down as much as 17.2% earlier in the session.
NYSE: NU
Key Data Points
After the market closed yesterday, Nu published its fourth-quarter results. While the company's earnings were in line with Wall Street's expectations, revenue fell short of the market's target -- and investors aren't happy with the company's forward guidance either.
Nu stock falls on Q4 sales miss
Nu reported non-GAAP (adjusted) earnings of $0.12 per share on revenue of $2.99 billion. The profit for the period was in line with the average analyst estimate, but the average Wall Street estimate had called for sales of $3.17 billion in the period.
Revenue was still up 24.6% year over year, and the company closed out the period with 114.2 million customers -- up 22% year over year. But investors may be seeing some potentially worrying signs beyond the sales miss. Despite purchase volume increasing to $32.2 billion from $30.9 billion in the third quarter and beating expectations, revenue fell short of the target. This could indicate that the company is seeing its pricing power soften a bit.
What's next for Nu?
Nu CEO David Vélez says that 2025 will be another big investment year for the company. While continuing to invest heavily to expand its infrastructure and customer base is probably a good thing for the business's long-term outlook, some investors may be disappointed with what that means for the profit outlook this year.
Nu is prioritizing driving rapid adoption for its services in its Brazilian, Mexican, and Colombian markets, and that could weigh on profitability in the near term. On the other hand, the business has already grown to an impressive scale -- and its Q4 report actually looked pretty strong in most respects. For long-term investors, today's sell-off could be a good chance to buy the stock.
