James Brumley, The Motley Fool

Thu, May 22, 2025, 2:00 AM6 min read

• The banking business is increasingly moving online.

• Nu's growth proves it knows how to attract consumers interested in this digital alternative.

• The company is in the right place at the right time, but its current rate of growth may not be sustainable.

• 10 stocks we like better than Nu Holdings ›

Veteran investors know it's always possible to stumble across a mega-winner like Amazon, which has produced a six-digit percentage return since its 1997 initial public offering, changing early investors' lives as a result. These same investors, however, also know most stocks don't do nearly this well. Sometimes the hunt for these companies can even end up doing more harm than good.

And this reality raises questions about relatively young and little-known Nu Holdings (NYSE: NU). Although it's in a completely different business than Amazon is, it's an interesting growth prospect with a compelling backstory. Maybe a big enough position in this small stock could set you up for life. Or, maybe not.

Nu is an online bank. Like any of its traditional brick-and-mortar counterparts, Nubank offers loans, credit cards, business services, investing services, insurance, and payment solutions. Thanks to the addition of 4.3 million new customers during the three months ended in March, it now serves 118.6 million people, versus fewer than 10 million just six years ago. Sure, the COVID-19 pandemic helped all digitally native businesses by virtue of funneling people toward online/self-service providers. Clearly this company is also doing something right, however, in light of its incredible growth.

So why haven't more of your friends, family, neighbors, and maybe even you heard of it? Because it only operates in Latin America, and predominantly in Brazil. For perspective, as the 2025 first quarter, 90% of its deposits were in Brazil. The remainder come from Colombia and Mexico, where it's also offers banking services.

And doing business in this region is making a world of difference to investors looking for a high-growth opportunity.

In many ways, where South America is now is where North America was a little more than 20 years ago. Although the continent has certainly been able to offer some degree of mobile phone connectivity and high-speed internet for the better part of the past couple of decades, easy and affordable access to these two technologies is only now becoming commonplace.

A record 137 million smartphones were shipped to Latin America in 2024, according to data from research outfit Canalys, while Phocuswright believes the region's mobile phone penetration rate will reach 74% of the population this year. Of those devices, 88% are apt to be web-connected smartphones. Half of these expected mobile subscribers will also likely live in Brazil and Mexico, where Nubank operates.