Nubank went public on the New York Stock Exchange under the ticker symbol "NU". The stock opened at $11.25 after it was priced at $9 per share, the top end of its expected range. The company was ranked 40 on the CNBC Disruptor 50 list.
Nubank launched with a purple no-fee credit card in Sao Paulo, Brazil, a country notorious for its high-fee, low-tech banking system. The company has grown to 48 million customers across Brazil, Mexico, and Colombia, and is valued at more than Chime, or Sofi.
People still had some questions about digital banking, even though we were growing fast. David Vélez, CEO and co-founder of Nubank, said on CNBC that it was still scary for a lot of people.
The behavior of most of the population was forced to change because branches were closed due to the Pandemic. People started trying us and realized we were a better option, and suddenly we started seeing people in their 60s, 70s, and 80s using us.
Nubank shares were trading higher by 15% in the early afternoon on Thursday, but came down a little from their first-trade spike.
The financial system in Brazil was inefficient and difficult to access, with five banks controlling over 80% of the country's assets, annual credit card interest rates running up to 300%, and a third of the population unbanked. The majority of Brazil's cities only have bank branches, but a digital platform could support customers regardless of location. As of September 30, the company estimates that it has given the first credit card or bank account to 5.1 million people.
The parent company of Nubank had a $500 million investment from Warren Buffet. Nubank is pushing online banking expansion across the LatAm region with additional buy-in from companies like Ribbit, Tencent, and Vélez. The no-fee structure has saved customers over $2 billion, according to the company.
The banking branch will not survive the way it is. Most of the providers of financial services will be digital in the next five to ten years because it is too costly to serve the majority of users.
According to a report from CBInsights, venture investors poured $9.3 billion into Latin America in the first six months of 2021, compared with $5.3 billion all of last year. The LatAm-focused fund was launched in 2019.
The recent downdraft in shares of high-valued, high-growth, money-losing businesses has led to an outsized selloff in companies that will hit the market in 2021. 55 tech companies have made their debut in the U.S. this year through an IPO, special purpose acquisition company, or direct listing, according to CNBC. GlobalFoundries is less than 20% off its high price.
In the past three months, the Renaissance IPO Exchange Traded Fund (IPO), which invests in companies that have gone public in the last two years, has fallen more than 12%, compared to a nearly 5% gain for the S&P 500.
Morgan Stanley, Goldman Sachs and Citigroup were the lead underwriters.
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