Nu Holdings (NYSE:NU) shares dropped more than 6% intra-day today after Citi analysts downgraded the stock from Neutral to Sell, lowering their price target from $14.60 to $11. The move reflected concerns over the company’s high valuation and decelerating growth in its primary Brazilian market.

The analysts acknowledged the significant strides made by Nu Holdings’ management in achieving strong profitability. However, the current valuation appeared difficult to justify without accelerated growth in Brazil, the company’s core market. With operations in Brazil deliberately slowing, the analysts suggested that opportunities for profit-taking had emerged, especially given the stock's 50% year-to-date appreciation.

Nu Holdings’ shares were trading at elevated levels, with a price-to-earnings ratio of 24.2x and a price-to-book value of 6.2x. The analysts noted that such valuations could only be supported by a robust growth trajectory in Brazil, which has now tapered. While the company’s efforts to diversify and expand into other markets held long-term promise, these avenues were expected to take time to contribute meaningfully to profitability, reinforcing the view that the current valuation was overstretched.