Warren Buffett Is Banking on This Hot Fintech Momentum Stock
After hitting a new weekly volume peak since going public, we dove into the charts for a rapidly-growing banking firm and like what we see.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
Last week, shares of Nu Holdings NU saw their highest weekly volume since the company went public in December 2021. Why are investors suddenly taking notice of this fintech company, and how high can momentum carry this stock?
Nu Holdings is mostly unknown in the U.S., but the company is a household name in Latin America, where it has over 100 million online banking customers. Think of NU Holdings as a faster-growing, overseas version of another company we like, SoFi Technologies SOFI.
Nu Holdings has significant size, as its shares are valued at $71 billion. The company operates mainly in Brazil, where a substantial portion of the country’s 217 million residents have limited access to traditional banking services.
According to the chart, if you plan to step into Nu Holdings, prepare for some volatility.
The stock fell below its 200-day moving average (red) — and below $10 per share — in early August. But by the end of the month, Nu Holdings gained more than 50% from its August 6, 2024 intraday low to close at an all-time high of $14.97.
So far, the early September selloff has had only a minor negative impact on Nu Holdings. As of Wednesday's close, the stock was less than 5% from its all-time high.
Nu Holdings' all-time high occurred on the highest volume in the stock’s history (arrow), indicating the potential presence of institutional buyers. The stock is performing well this year, gaining 37% over the past month, and 84% year-to-date.
This is a growth story. Nu Holdings saw revenue growth of 130.36% in 2021, 182.22% in 2022 and 67.54% in 2023. The company plans to maintain this rapid growth by expanding across Latin America, particularly targeting consumers in Colombia and Mexico.
Nu Holdings has captured the attention of Warren Buffett, who started accumulating shares in late 2021.
Buffett’s Berkshire Hathaway BRK.A holding company now owns 107 million shares, at an average price of $9.82. For Buffett, this is a relatively insignificant position, as it only comprises 0.5% of Berkshire’s portfolio.
Investors shouldn’t ignore Brazil, or the growing economic power of its 217 million inhabitants. It’s a developing country with a GDP of $2.33 billion U.S., and it has become one of the top destinations for investment capital in South America.
São Paulo, where Nu Holdings is based, is the New York City of South America. The city has 11.45 million residents, and is scheduled to host its first NFL game this weekend.
At the time of publication, Ponsi was long NU.
