Ricardo Pillai
3 min read
In This Article:
We came across a bullish thesis on Nu Holdings Ltd. (NU) on Substack by Ray Myers. In this article, we will summarize the bulls’ thesis on NU. Nu Holdings Ltd. (NU)'s share was trading at $13.13 as of May 15th. NU’s trailing and forward P/E were 29.85 and 23.26 respectively according to Yahoo Finance.
A person holding their smartphone, utilizing the company's digital banking services from anywhere.
Nu Holdings (NU) has faced recent market volatility, driven by macroeconomic headwinds like Latin American currency depreciation and trade uncertainties. However, a 23% rally following BRL strength and tariff rollbacks reflected the market’s underlying optimism. Despite this, Q1 2025 earnings triggered an 8% intraday stock drop due to short-term pressures, including a 1.8% ARPU decline, rising interest expenses, and increased loan loss provisions. These concerns overshadowed strong fundamentals: revenue rose 18.7% YoY to $3.45 billion, and customer growth remained robust at 19.4% to 118.6 million, with an 83% activity rate. The ARPU dip was Nu’s first in two years, largely attributed to accelerated growth in lower-income, early-stage markets like Mexico and Colombia. In Brazil, where Nu serves 59% of adults, monetization remains a powerful lever, with $2.34 billion in revenue and a record $3.6 billion in loan originations.
The company’s tiny share in adjacent financial services—like payroll loans and insurance—presents significant upside. Mexico’s growth is accelerating, with over 11 million customers and deposits up 135% YoY to $5.4 billion, bolstered by a newly secured banking license. Despite near-term margin pressures from expansion costs, Nu posted 47% YoY net income growth to $557 million and an impressive 40.4% net income margin. Its shift toward secured, interest-generating loans and declining customer acquisition costs highlight its scale-driven model. With deposit and loan growth at 30% and 23% respectively (40% FX-neutral), Nu is clearly building a profitable and durable fintech franchise. At a forward P/E of 32, the stock offers a compelling long-term opportunity with substantial upside as monetization across Latin America accelerates.
Nu Holdings Ltd. (NU) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held NU at the end of the fourth quarter which was 14 in the previous quarter. While we acknowledge the risk and potential of NU as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
