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Nubank Stock Gets a Boost from $1B Warren Buffett Investment

Through 2022, investors are expecting to see more people embrace cryptocurrency and neobanks. With multiple interest rate hikes expected this year, there’s increasing demand for alternative banking. Of course, cryptocurrency is a path d…

Through 2022, investors are expecting to see more people embrace cryptocurrency and neobanks. With multiple interest rate hikes expected this year, there’s increasing demand for alternative banking. Of course, cryptocurrency is a path directly toward the new era of banking, and any banks willing to embrace crypto at this point are ahead of the pack. Nubank (NYSE:NU) is one such bank, offering one of the earliest Bitcoin (BTC-USD)-linked exchange-traded funds (ETFs). The company has managed to capture the admiration of investing monolith Warren Buffett, who was a pre-IPO investor in NU. But now, Nubank stock is seeing gains catalyzed by Buffett again, as he deepens his bet.

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Nubank is a Brazilian company which came public at the end of 2021. The bank has been praised for its embrace of cryptocurrency, making the emerging asset class an integral part of its business. In June, the company launched the QR Bitcoin ETF in Brazil, one of the earliest Bitcoin ETFs on the market. Around this time, the company also saw its first investment from Warren Buffett; through Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B), Buffett invested $500 million in the company.

Things are beginning to heat up for Nubank and NU stock in recent months as well. Dec. 9 saw Nubank stock launch on the New York Stock Exchange. The months since haven’t been particularly kind to NU. Since the IPO, NU stock has traded below its debut price. But, with news today, it seems the the stock is being thrown a lifeline.

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Nubank Stock Rises on News of Another Buffett Investment

Warren Buffett appears to believe that Nubank stock is the next huge fintech play. Buffett is deepening his stake in the company, and helping to catalyze some helpful gains.

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It is coming to light today that Buffett’s Berkshire Hathaway has made another investment in Nubank stock, this one double the size of the pre-IPO investment. The $1 billion addition to the Berkshire portfolio doesn’t come without a tradeoff, though. The firm is dropping significant portions of its investments in Visa (NYSE:V) and Mastercard (NYSE:MA). Specifically, it is selling $1.8 billion in V and $1.3 billion in MA.

The investment — and simultaneous sale — might signify Buffett’s warming up to cryptocurrency and crypto-centric stocks. Indeed, Nubank is among several Bitcoin-adjacent plays that make up the Berkshire portfolio now. These other plays include U.S. banking entities like BNY Mellon (NYSE:BK) and Bank of America (NYSE:BAC). So while Buffett and accomplice Charlie Munger continue to say they will never invest in Bitcoin, it looks like they are not opposed to the asset class within the confines of an institution like Nubank.

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As news of the investment makes the rounds, Nubank stock is on its way up. Shares of NU closed up more than 5%.

On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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