Key insights
- Susquehanna downgraded Nu Holdings to Neutral, citing deteriorating operating margins due to a shift towards credit cards and unsecured lending, and an anticipated investment cycle for global expansion. The firm lowered its price target, reflecting concerns over rising credit loss allowances and a constrained secured lending book. This downgrade, coupled with a missed EPS in Q1 2026, suggests potential headwinds for the company and could weigh on investor sentiment in the fintech sector.
Investing.com - Susquehanna downgraded Nu Holdings (NYSE:NU) to Neutral from Positive on Tuesday and lowered its price target to $13.00 from $18.00, citing deteriorating operating margins and an anticipated investment cycle. The stock currently trades at $11.93, near its 52-week low of $11.44, and has declined 32% over the past six months.
The firm’s analyst James Friedman noted that Nu Holdings’ operating margins fell 760 basis points to 19.2% in the first quarter of 2026, following an expansion of more than 1,000 basis points from the third quarter of 2023 through 2025. The margin deterioration coincided with the company’s credit card push in Brazil and regional expansion into Mexico and eventually the United States.
The departure of Brazil-based CFO Guilherme Lago and the hiring of Visa’s North America CEO Rob Livingston likely expedites the global expansion, Friedman said. Nu Holdings indicated it will pursue "a global and local finance leadership structure."
The analyst said margin pressure stems from a shift in credit exposure toward credit cards and unsecured lending, which represented 98% of incremental originations in the first quarter. Credit Loss Allowances rose 33% quarter-over-quarter to approximately $1.8 billion and the reserve balance increased roughly $800 million. An InvestingPro tip notes the company is quickly burning through cash, while data shows the stock appears undervalued based on Fair Value analysis—one of 7 additional ProTips available to subscribers.
Susquehanna said the secured lending book, which could offset the mix shift, remains constrained by FGTS regulatory changes and a relatively nascent private payroll product. The firm trimmed estimates pending better visibility on the company’s investment cycle.
In other recent news, Nu Holdings reported its Q1 2026 earnings, which showed an earnings per share (EPS) of $0.18, falling short of the projected $0.20. However, the company achieved record revenue of $5 billion and a net income of $871 million, representing a 41% increase compared to the previous year. The earnings announcement comes amid significant changes in the company’s leadership. Rob Livingston has been appointed as the new Chief Financial Officer, effective July 13, taking over from Guilherme Lago, who will transition to a special advisor role. Livingston joins from Visa, bringing extensive experience in corporate finance and investor relations. In conjunction with these developments, BofA Securities downgraded Nu Holdings’ stock to Underperform from Neutral, with concerns about the CFO transition and its timing. The price target was also reduced from $16.00 to $10.00. These events are part of Nu Holdings’ broader strategy as it navigates a challenging credit environment in Brazil and expands into markets like Mexico, Colombia, and the United States.
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