Nubank is no longer the most valuable bank in Latin America after the stock market crash

Expect a more intense increase in interest rates in United State It had an additional impact on new technology companies and made the market value of nubank fall under the value of Itau. Thus, Nubank The most valuable bank in Latin America. Fintech closed on Friday, the 14th, with a value of $37.4 billion, while Brazil’s largest private bank was valued at $39.5 billion. When it went public in December, Nubank was valued at $42 billion.

At the beginning of 2022, the digital bank, which made one of the largest initial public offerings in the United States last year, saw its share decline by 13.4%. By comparison, Itaú shares traded on the same New York Stock Exchange are up 13.3% in the period. These are from Bradesco (which has a market capitalization of $32.9 billion), up 10.2%.

Among US fintech, payments and technology companies, digital exchange Robinhood lost 15%, Toast lost 25% and Affirm lost 31%.

General movement. tech companies index Nasdaq It’s already down about 5% this year, while banks love Goldman SachsAnd JP MorganAnd City e Morgan Stanley He started predicting a rate hike before Federal Reserve (Fed, US central bank) early in March, followed by three more increases through December. From zero, US interest rates should rise to 2% or 2.5%, making the cost of capital for companies more expensive. And technology companies are the ones that need the most money.

To a US economist in Citi, Veronica Clark, assessing that the Fed’s rhetoric has become more contracting, as inflation in the US does not give a respite. If the bank predicted before the first rate hike in the US in June, it now sees the increase taking place in March. Clark does not rule out a sharper increase in early 2022 of 0.50 percentage points. This movement tends to reduce the liquidity (availability of funds) in the financial market.

In addition to the Fed case, the CEO of a Brazilian company that recently went public in the United States says, Brazilian companies are facing greater penalties in the wave of share repricing in the tech sector. He says concerns about financial risks, the possibility of a recession this year, and electoral uncertainty are contributing to a sharp decline in stocks compared to their international peers.

This movement, however, is uneven. while Nubank, Bagh SeguroAnd Stone e XP The share prices of some traditional Brazilian companies go down or down from zero to zero, and rise in New York. In addition to the role of banks Petrobras Accumulate 13% high and file 10%. Even airlines Azul and Gol are doing positively, despite the setback in the travel sector with Ô Micron variant of coronavirus.

It is normal, in the face of a cycle of rising interest rates, that investors prefer securities of companies with a well-established business model and stable profits. Commodity producers and exporters, Petrobras and Vale are strong dividend payers. As well as Brazilian banks, which are among the most profitable in the world. Nubank, like many fintech companies, is still in the red – it lost R$528.4 million in the first nine months of last year.

One clue lies in the movement of foreign investors in b 3. This month, they are investing 6.8 billion Brazilian riyals in the local market, and according to sources, the greatest interest is in commodity producers, especially in light of the acceleration of inflation worldwide, which tends to increase the prices of these companies’ products.

optimism

The market movement that has removed Nubank from being the most valuable bank in Latin America contradicts analyst expectations for fintech results. After the IPO, investment banks began covering the stock with optimistic estimates for the future, with the billionaire’s earnings forecast from the middle of this decade.

In a report released Thursday, UBS BB expects Nubank to reach 52 million customers in Q4 2021 results, which have yet to be released. The operation will still result in a loss, but analysts have clarified that, according to the revised parameters, it will be close to zero, with a loss of $15 million.

The professionals wrote: “ARPAC (Average Revenue Per Active Client) is set to expand, and we believe this is the key indicator to watch.” They expect Nubank’s credit portfolio to jump 81%, they estimate, to $6 billion.

On the other hand, there is a discrepancy regarding the numbers projected by UBS BB for Itaú. Brazil’s largest bank should report a quarterly profit of R$7 billion, the house says, with a loan portfolio approaching R$800 billion and margins of R$20.1 billion.