Nubank, the world’s biggest standalone digital bank, cuts IPO valuation

Nubank, the Berkshire Hathaway-backed digital banking behemoth based in Brazil, cut the targeted price range for its planned IPO by about 18% this week. The company earlier this year planned for an IPO valuation of more than $50B.

Why should we care?
Analysts say the move was likely motivated by a rise in Treasury yields, which has “dampened investor sentiment towards major tech stocks.” Meanwhile, the new coronavirus variant Omicron could also be fueling a more cautious approach. Regardless, even at a lower valuation, Nubank is poised to become one of the biggest fintech IPOs of the year, on the heels of Robinhood and Coinbase. Founded in 2013 as a credit card issuer, Nubank has acquired 48 million customers across Brazil, Mexico and Colombia, and has expanded to checking accounts and loans. The company also offers life insurance, products for entrepreneurs, instant payment services, and investment products. Nubank generates revenue through card swipe fees, and said it turned a profit in the first half of 2021 in its Brazilian operations. “We have worked closely with our customers to understand their needs and pains, and how to build products to address them, creating a 'Nubank standard quality' of services that customers have been asking to go beyond financial solutions for years,” David Vélez, CEO of Nubank, said earlier this month.