What is behind the fall in Nubank shares on the New York Stock Exchange?

In a day of high volatility in the markets, the action of the Brazilian neobank Nubank fell 7.26% this Monday on the Nasdaq.

The reason? According to the specialized media outlet The Motley Fool, the fintech founded by Colombian David Vélez and backed by legendary investor Warren Buffet is struggling as inflation rises and the political responses to combat that inflation worry investors.

With over 48 million users and backed by big names like Berkshire Hathaway, Sequoia Capital and Tiger Global Management, Nubank raised US$2.6 billion in an initial public offering (IPO) launched in the United States in December, getting more than 800,000 people to buy shares.

Thanks to the IPO price, Nubank reached a market value of US$47 billion based on the outstanding shares listed in its filings with the US Securities and Exchange Commission.

But, after reaching a maximum price of US$12.24, the stock collapsed this Monday to US$7.08, which is equivalent to a drop of 42%.

“There could be more pain to come for technology and fintech stocks, but this is a company that is rapidly revolutionizing the Latin American banking market,” explained investor and analyst Bram Berkowitz of the aforementioned media. “Personally, I would like to buy the shares a little lower, but I’m much more interested in them now.”

As he explained, when Nubank went public in December with a valuation of more than US$40 billion and then it hit a market capitalization of more than $50 billion, stocks were expensive.

“Now, with a market capitalization of $33 billion, the valuation looks much better and is actually similar to what Berkshire Hathaway invested in,” he added.

The post What is behind the fall in Nubank shares on the New York Stock Exchange? appeared first on Newsy Today.

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