Nubank CEO confident that the majority will keep their shares after the lock-up

With the end of the lock-up of shares of Nubank (NOT) This Tuesday, May 17, CEO David Vélez said in a meeting with investors that he was “happy to announce” that the majority of the fintech’s shareholders had reinforced their position as long-term investors. “The majority of shareholders do not intend to sell the shares with the end of the lock-up, which shows that Nubank is a long-term opportunity“, said.

When Nubank did the initial public offering (IPO), not all of the shares were sold, as there are shareholders of the company (early-employees holding shares, for example) who were unable to market their shares shortly after going public. They had to wait a certain period. This blocking period ends this Tuesday (17) when up to US$ 26,000 million in shares could be released for trading.

On Monday, Nubank reported an adjusted net income of $10.1 million in the first quarter of 2022, reversing a net loss of $11.9 million in the same period last year.

The fintech had a record total revenue of $877.2 million in the first quartera 226% growth on a currency-neutral basis compared to the first quarter of 2021, beating the average Bloomberg analyst estimate of $630.9 million.

The company said it increased the number of clients in Brazil by 55% compared to the same period last year, reaching 59.6 million users. Likewise, the small and medium business customer base grew by 167% compared to the first quarter of 2021, reaching 1.6 million as of March 31, 2022.

Nubank recently secured a US$650 million syndicated line of credit to invest in Mexico and Colombia and expand its business. Currently, the digital bank, which operates in these markets as Nu, has 2.1 million customers in Mexico and 211,000 in the South American country.

Due to volatility and pressure with the end of the share lock-up on May 17, Nubank lost more than a third of its market value less than five months after the IPO.

Credit, money for tech companies that are big on cash, is getting more expensive. It is more expensive to finance a company that does not make substantial profits in the short term.

Nubank increased its loan portfolio to US$8.8 billion, “maintaining healthy credit levels,” Velez said, at an investor conference after the results were released.

Investor Call Highlights

• Nubank expects that as the loan portfolio grows, the margins should increase.
• The fintech said it was created in the midst of recessions in Brazil and knows how to navigate these cycles.
• The company said it is sufficiently capitalized to continue expanding the ecosystem, including through mergers and acquisitions.
• Mexico is outperforming Brazil in NPS (Net Promotional Score) metrics. There is greater delinquency in the country than in Brazil, since, according to Nubank, Mexico has 12% of the population with credit, which indicates a greater “consumer pain”. The majority of Nubank users in Mexico arrive through organic referrals
• Velez said he is confident in the resilience of Nubank’s credit originations in this period of volatility.

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