Now Holdings‘ (NYSE: NOW) Shares are falling in Thursday trading following the company’s third-quarter earnings release. The Brazil-based fintech’s stock price fell 7.9% as of 12:15 p.m. ET.
Now posted its third-quarter earnings results after the market closed yesterday and even posted revenue and profit that exceeded Wall Street expectations. Despite the third quarter numbers, the company’s share price is down today as investors and analysts become increasingly bearish on Brazil’s macroeconomic backdrop.
Start your morning smarter! Wake up with Breakfast news in your inbox every market day. Register for free »
Now posted third-quarter earnings per share of about $0.11 on revenue of $2.94 billion. According to the average analyst estimate, as polled by FactSet, the company should post earnings per share of about $0.10 on revenue of $2.6 billion. Revenue rose about 37% year over year and earnings per share rose about 81%.
The company added 5.2 million new customers in the quarter and ended the quarter with 109.7 million customers – an increase of 23% year over year. Meanwhile, the company posted average revenue per customer of $11, representing an annual increase of 25%.
In terms of the company’s sales, profit, engagement and revenue figures, there was really nothing to be disappointed about in the quarter. But the macroeconomic outlook in Brazil has led to an uptick in bearish sentiment for stocks.
The Brazilian economy has missed a number of benchmarks recently and has seen an unexpected rise in inflation. In turn, the company’s central bank is expected to implement additional interest rate hikes to counter the trend.
Last week, the country’s banking authority implemented another increase of 50 basis points, bringing the core interest rate to 11.25%. The new central bank leader, Gabriel Galipolo, said yesterday that sticking to the target of bringing inflation back to the 3% target was non-negotiable.
While Galipolo said there are several potential paths to take to achieve the target inflation rate, continued rate hikes are a likely option. If interest rates continue to rise in Brazil, it could weigh on stock valuations and create business headwinds for fintech players, including Nu.
Consider the following before purchasing shares in Nu Holdings:
The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Nu Holdings wasn’t one of them. The ten stocks that made the cut could deliver monster returns in the coming years.
Think about when Nvidia created this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $896,358!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates and two new stock picks per month. The Stock Advisor is on duty more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns November 11, 2024
Keith Noonan has no positions in the stocks mentioned. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.
Why Nu Holdings Shares Are Plunging Today was originally published by The Motley Fool
