Today yes, today yes… not today! Despite the stellar result, Nubank’s shares fell almost 10% in NY and moved away from the IPO price

It may not yet be today that the share price of the Nubank (NU) will return to US$9, the digital bank’s IPO price in 2021.

Despite the quarterly result well above analysts’ estimates released yesterday, the digital bank’s shares, traded on the New York Stock Exchange (NYSE), plummeted almost 10% this Wednesday (15), but then reduced slightly to fall.

At around 12:30 pm, NU shares fell 7.36%, to US$ 8.18. Shortly after opening, the drop exceeded 9.50%.

With the Brazilian stock exchange closed due to the Proclamation of the Republic holiday, it is not possible to measure the impact of performance on the ROXO34 BDRs (share receipts), which should only reflect the fall tomorrow.

Initially, the movement appears to be due to profit taking. In the week, until yesterday’s closing, Nubank’s shares had risen 3.64%, to US$8.83, creating the expectation that today they could finally return to IPO levels. During the year, NU shares have accumulated an increase of around 100%.

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Nubank’s numbers in the third quarter

Nubank reached the third quarter results season of big banks with big star status. And it didn’t disappoint. The digital bank recorded adjusted net profit of US$355.6 million — equivalent to R$1.7 billion at current exchange rates.

The comparison with the third quarter of 2022 looks more like that of another bank, as Nubank’s profit between July and September 2022 was just US$63 million. In other words, the result increased 464% from one year to the next — or 426% without the impact of the exchange rate.

Third-quarter profit far exceeded analysts’ estimates, which were already optimistic and pointed to US$276 million, according to data from Bloomberg.

As if that weren’t enough, Nubank’s profitability on equity (ROE) reached the impressive level of 25% in the third quarter. In the same period last year, this indicator was just 5%.

Thus, Nubank won the crown as the most profitable bank among the large publicly traded banks operating in Brazil, surpassing the all-powerful Itaú Unibanco and Banco do Brasil.

If we consider accounting profit, which excludes non-cash expenses such as executive share compensation, Nubank’s ROE was 21%. Still, this is a level in line with Itaú and BB.

Default remains high

Practically all indicators of Nubank’s results were positive, except for default. The rate of delays of more than 90 days in the digital bank’s portfolio ended September at 6.1% — an increase of 0.2 percentage points in the quarter and well above the 4.7% of 12 months before.

On the other hand, short-term defaults (15 to 90 days) fell for the second consecutive quarter. In other words, this could be a sign that the digital bank default rate is getting closer to its peak.