Should You Follow Cathie Wood in Buying the Nu Holdings Stock Dip?

 

Should You Follow Cathie Wood in Buying the Nu Holdings Stock Dip?

Nu Holdings Drops 19%—Is This a Buying Opportunity?

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Key Takeaways:

  • Nu Holdings (NYSE: NU) stock plummeted 19% after a weaker-than-expected Q4 earnings report.
  • Revenue grew 50% on a currency-neutral basis, but only 24% in U.S. dollars, missing analyst expectations.
  • Cathie Wood’s Ark Invest bought Nu Holdings for the first time in 11 months, despite selling shares over the past year.
  • Nu Holdings trades at a forward P/E ratio of just 13.5, significantly lower than other fintech competitors.

Why Did Nu Holdings Stock Drop?

On February 21, 2025, Nu Holdings reported Q4 2024 earnings, and the market reacted negatively. While revenue increased, certain key financial metrics declined sequentially, raising concerns:

✅ Revenue Growth:

  • +50% growth in local currency, but only +24% in USD due to exchange rate effects.
  • Analysts expected +32% revenue growth, leading to a missed target.

✅ Earnings Performance:

  • Adjusted net income surged 54%, slightly beating expectations.
  • However, this was the first quarter in over a year without a double-digit earnings beat.

❌ Concerning Metrics:

  • Average revenue per customer (ARPU) declined for the third consecutive quarter, now at $10.70.
  • Net interest income dropped for the second consecutive quarter.
  • Customer activity rate declined, indicating weaker user engagement.

Despite these concerns, Nu remains one of Latin America’s most dominant fintechs, with 58% of Brazil’s adult population using Nubank.

Cathie Wood's Investment: A Bullish Signal?

Why Ark Invest Bought Nu Holdings Stock

  • Ark Invest added Nu Holdings to its ARK Fintech Innovation ETF (ARKF) after nearly a year of no purchases.
  • Cathie Wood had been selling shares sporadically over the past 11 months.
  • The fact that ARK bought Nu despite the 19% drop suggests long-term confidence in its potential.

🔹 Is Nu Holdings Still a Growth Stock?
Despite short-term struggles, Nu Holdings is still expanding faster than its fintech competitors like PayPal (PYPL) and Block (SQ):

  • Nu’s revenue grew 24% YoY in USD
  • PayPal and Block reported just 4% revenue growth in the same period.
  • NU stock trades at 13.5x forward earnings, a low valuation for a high-growth company.

Should You Buy Nu Holdings Stock?

🔹 Reasons to Buy NU Stock Now:
✔ Still a high-growth fintech in Brazil, Mexico, and Colombia
✔ Trades at a cheap valuation (P/E 13.5) compared to global fintech stocks
✔ Cathie Wood's buy signals renewed confidence in its potential

🔹 Risks to Consider:
❌ Revenue slowdown in USD terms due to currency fluctuations
❌ Declining ARPU & user activity rates raise engagement concerns
❌ Short-term volatility as investors react to the earnings report

Final Verdict: Buy the Dip or Stay Cautious?

Nu Holdings is at a crossroads. While growth is slowing, the company is still expanding faster than most global fintech stocks. Cathie Wood's investment suggests confidence, and at a P/E of 13.5, Nu Holdings may be undervalued.

📌 Best Strategy?

  • Long-term investors may find this dip a good entry point.
  • Short-term traders should watch for further volatility before buying.

📢 What’s Your Take?

Will you follow Cathie Wood and buy the Nu Holdings dip? Let us know in the comments!

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