NuBank: review of the IPO

Trading in shares of Brazilian fintech NuBank started on December 9. The stock was floated at $11.26 and at the time of writing is at $9, down 20%.

Why are we so interested in this company? Yes, even Warren Buffett himself has invested in it, but that’s not the point. NuBank provides credit and debit card, loan, and insurance services.

Remarkably, the revenue for the first nine months of 2021 exceeds all of the company’s revenue for 2020. NuBank generates the lion’s share of revenue by investing the proceeds in government bonds.

The company’s platform has 48.1 million users. And there is reason to believe that this is far from the limit. In Brazil, for example, the company covers only 28% of the population aged 15 and older.

78% of payments in Latin America are still made on paper – and the share of electronic payments will steadily grow. And that means Nubank will be able to make money on processing this volume of transactions.

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