Nubank and Klarna valuations diverge on profitability
The public markets reward consistent profitability over growth-at-all-costs, as evidenced by the stark valuation divergence between Nubank and Klarna.
The argument
The speakers argued that Nubank's share price has performed well because it consistently grew profitability at a rapid pace, whereas Klarna has faced valuation pressure due to being heavily loss-making and experiencing negative surprises like credit losses.
The thesis, stress-tested
✓ What validates it
- ✓Klarna's post-IPO financial reports showing a path to profitability
- ✓Nubank maintaining its rapid profit growth rate in upcoming quarters
▸ Risks discussed
- ▸Credit losses on loan products can negatively surprise public markets
- ▸Chasing public valuations can distort a company's product roadmap
Hear it yourself
"Well, Nubank's very consistently grown its profitability at a very rapid pace over that period. Planner is still heavily loss making. Hence, the valuations look very different."
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