Why Nu Stock Lost 19% in February

Core Viewpoint - Nu Holdings experienced a 19% decline in stock value in February following a strong fourth-quarter earnings report, primarily due to negative sentiment regarding new growth plans and the economic situation in Brazil [1] Group 1: Company Growth and Performance - Nu Holdings is an all-digital bank based in Brazil, rapidly growing by adding millions of customers each quarter, which drives revenue growth and profitability [2] - In the fourth quarter, Nu added 4.5 million customers, bringing the total to 114.2 million across Brazil, Mexico, and Colombia, with 58% of Brazil's adult population as members [3] - 95% of members use their accounts monthly, and 61% of monthly active members consider Nu their primary bank account, with significant growth in Mexico and Colombia [4] - Net income rose from $361 million to$553 million year-over-year, with revenue increasing by 50% on a currency-neutral basis, and average revenue per active user (ARPAC) increased by 23% [5] Group 2: Future Plans and Market Sentiment - Management plans to invest heavily in the business in 2025, aiming to expand beyond traditional banking, while also anticipating macroeconomic challenges in Brazil [6] - The company has outlined a "3-act story" for its growth strategy, having completed Act 1 (developing its banking business), with Act 2 focused on expanding beyond financial services, and Act 3 aimed at becoming a global digital bank [6] - Despite the risks associated with young companies, Nu's stock is considered cheap at a forward one-year price-to-earnings (P/E) ratio of 13, presenting a potential long-term investment opportunity [7]