Nu Holdings: A Strong Buy Amidst Rapid Growth in Fintech

Investors are eyeing Nu Holdings for its impressive growth in fintech. The company saw a 38% revenue increase in Q3, indicating strong performance and a promising opportunity for stock investors.

Date: 25-01-2025

AI Rating: 8

Growth
Nu Holdings (NYSE: NU) has demonstrated exceptional growth potential with reported revenue of $2.9 billion in Q3, representing a significant 38% increase year over year. This growth outpaced revenue from the same period in 2021 by over 500%. The company's digital-only banking model is thriving as they add customers rapidly, reflecting increasing adoption of their services.

Profitability
For the first time in 2023, Nu Holdings reported positive net income after experiencing a net loss of $9.1 million in 2022. In Q3, their net income reached $553 million, a substantial increase of 83% year over year with a profit margin of 18.8%. Positive unit economics are evident, with an increase in average revenue per active customer by 25% in currency-neutral terms. Additionally, a decline in costs to serve each customer indicates improved operational efficiency.

Valuation
Currently, Nu's shares trade lower than their peak, presenting a favorable buying opportunity as they have a forward price-to-earnings ratio of 20.3, which is below historical averages and represents a discount compared to the broader S&P 500. Analysts anticipate revenue and earnings growth rates of 30% and 38%, respectively, from 2024 to 2026, suggesting strong potential returns for investors.

Stocks: NU