Nubank IPO Filing, Valuation Spotlights Heady Neobank Growth Expectations  


Through the pandemic, amid a heady pace of FinTech-related listings activity on U.S. exchanges, Nubank is, to quote an old movie, readying for its closeup.

Focused on Latin America and with roots in Brazil, Nubank is only the latest in the parade of neobanks listing their shares, but it has the distinction of being backed by famed billionaire investor Warren Buffett (specifically, through Berkshire Hathaway).

The company has filed confidentially with the Securities and Exchange Commission (SEC), through a document known as an F-1. The confidential nature of the filing means the exact details of the company’s financials have yet to be illuminated. But enough details are out there – and have been provided by peer neobanks that have gone public – that a read-across of trends and a roadmap of what lies ahead are discernible.

Also see: Brazilian FinTech Nubank Readies for IPO, Valuation Could Top $55B

First things are first, as they say. The reported $55 billion valuation that Nubank may fetch if/when it goes public early next year would tower over the $33 billion valuation Revolut fetched in its funding round over the summer.  The valuation is a reflection of what a company is presumably “worth,” and how much investors would pay to own the business, as well as all of its current and future earnings and cash flows.

As disclosed earlier in the year, Revolut’s revenues tripled through 2020, while its operating losses’ growth slowed.

Read more: London FinTech Revolut Triples Revenue Against Doubled Losses

As for the Nubank metrics that have been disclosed: Bloomberg noted that the company’s revenue for the first half of 2021 is more than $716 million, with a net income of $13.7 million. The company notes that it has 40 million users within its current key markets that span Colombia, Mexico and Brazil. At the beginning of this year, the company said it had 34 million users in place; barely three quarters in, there has been a more than 17% jump implied by that latest reading of 40 million consumers.

More details: Brazilian FinTech Nubank Raises $400M, Expanding in Latin America

One thing Wall Street will look toward, beyond revenue growth, is sustained operating profit. Nubank laid out its strategy in a recent interview with PYMNTS, when CEO and Founder David Vélez explained that his firm — in a bid to breed familiarity and trust within markets — always enters a market by launching a credit card as its first product, only later following this up with debit offerings.

See the interview: When Consumers Are Remote, Banks and Credit Unions Come to Them

And at a high level, Vélez said of the pandemic, “this crisis is accelerating a trend that was already accelerating: a trend toward digitalizing the entire economy — every single service. After the crisis passes, we’re only going to see even more acceleration of customers willing to use digital banking.”

In additional signs of broadening its offerings, Nubank said last year that it would acquire FinTech company Spin Pay. Nubank thus will expand its portfolio to offer Pix, a popular instant payments platform, to more consumers and eCommerce platforms.

The promise of the neobank is to offer a one-stop-shop for a range of financial services, in the service of conducting daily financial life. Nubank’s roster of products spans rewards programs, cards and loans. With users growing and the ecosystem solidifying, investors’ eyes will be on the proverbial bottom line.

Also see: Nubank Buys Instant Payments Platform Spin Pay