Growth and tech stocks continued to struggle as shares of the Brazilian company Nu holdings fell 8.4% today. The analyst started coverage of the stock.
So what?
Less than two weeks ago, the digital banking company went public with a price of $9 per share and a valuation of $41.5 billion.
The image is from the same source.
The market responded well, driving the stock close to $12 per share, but since then it has sold off along with many other tech and growth stocks, as investors worry about higher inflation, the impact of the omicron COVID-19 variant, and potentially less economic growth in the future than initially
Nu is currently trading at a discount to where it was before today's decline, which is why New Street Research initiated coverage on the stock today with a neutral rating and $9 price target.
What now?
Nu is a great growth story. The company completely disrupted the Brazilian and Latin American banking markets by offering a credit card with no annual fees, and then by expanding into other banking products such as cash management accounts, online investing, personal loans, and payments capabilities. Nu has 48 million customers.
I think the company is exciting, but the valuation is high. The $9 price target from Datta is testament to the stock's potential.
I think this stock could be a winner in the long run, but I also think there are opportunities to enter at a lower price. I'm not ready to invest yet because the valuation is starting to get more reasonable.
