Neobank reached market cap of R$297bn on Tuesday, surpassing Itaú’s R$288.5bn

05/29/2024

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Nubank is now the second-largest company in Brazil regarding market cap, behind Petrobras — Foto: Divulgação

Nubank has surpassed Itaú in market capitalization on the New York Stock Exchange (NYSE), claiming the title of the most valuable bank in Latin America. On the previous Friday, the digital bank had come close but did not surpass its rival. It took a 3.84% rise in Nubank’s share price on Tuesday, closing the regular session at $12.18, along with a 0.54% decline for Itaú, to make the shift official.

Nubank ended the day with a market cap of R$297 billion, according to Einar Rivero of Elos Ayta Consultoria, compared to Itaú’s R$288.5 billion. The movement makes the digital bank the second-largest company in Brazil regarding market cap, behind Petrobras.

This is not the first time Nubank has overtaken Itaú in market cap. Between January and February 2022, the two banks alternated as the most valuable. Being traded in dollars gives Nubank an edge over banks on the Brazilian stock exchange, such as Itaú, whose shares are traded in reais.

In practice, market cap is a way to measure how stock investors assess a company, including a “premium” that represents the potential for future gains and competitive presence in its market. This metric disregards aspects such as the balance of assets, cash, and liabilities.

From the perspective of the stock price relative to the bank’s book value, for instance, Nubank is being traded at a multiple of about 8.7 times. Meanwhile, Itaú is traded at around 1.7 times its book value. “The difference is that Itaú has decades of accumulated profits in its equity, whereas Nubank only started making a profit last year, in 2023; hence the difference in price to book value,” said Larissa Quaresma, an analyst at Empiricus Research.

*Por Beatriz Pacheco — São Paulo

Source: Valor International

https://valorinternational.globo.com/