Why I’m Betting Big on Nu Holdings (NU) – A Fintech Disruptor

I’ve been keeping an eye on Nu Holdings (NYSE: NU) for a while now, and after digging deep into the numbers, I’m finally opening a position. This isn’t your typical bank stock—it’s growing like crazy, turning profitable, and expanding across Latin America in a way that traditional banks simply can’t keep up with. Sure, there are risks, but I’m okay with that. The upside is just too good to ignore.

For those who follow my blog, you know I like finding undervalued or misunderstood stocks with strong growth potential. Just like I did with MercadoLibre (read here), I see NU as a massive fintech play in an emerging market that still has plenty of room to expand.

Is Nu Holdings Growing Fast Enough to Justify Its Valuation?

One of the first things I look at before buying a stock is whether its growth actually backs up the price. For NU, the answer is a pretty solid yes. Revenue has been on an absolute tear. In 2022, they pulled in $1.84 billion. By 2023? $8.03 billion. That’s a 122% compound annual growth rate (CAGR) in just three years. That’s the kind of growth you see in early-stage tech companies, not banks.

More importantly, NU isn’t just growing revenue—it’s actually profitable. In 2023, they reported a $1.03 billion net profit, a massive improvement from their $9.1 million loss in 2022. And it’s not slowing down. Analysts expect $0.12 EPS for Q4 2024, which would be a 50% jump year-over-year. That kind of growth, combined with profitability, is exactly what I want in a fintech stock.

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Is Nu Holdings Profitable?

Yes, and that’s what makes it different from a lot of other high-growth fintech companies. NU officially turned profitable in 2023 and has been steadily increasing earnings ever since. Their return on equity (ROE) is 30.39%, which absolutely crushes the industry average of 9.48%.

Free cash flow is also looking strong. In the last 12 months, NU generated $3.73 billion in free cash flow, meaning they’re not just burning money to fuel growth—they’re actually making serious cash while doing it. That’s a big deal for a fintech company.

This reminds me of another fintech that’s been gaining traction—Robinhood (HOOD). I wrote about whether Robinhood is a buy right now (read here). While NU and HOOD operate in different markets, they both share a common theme: disrupting traditional banking. If you're considering trading stocks with zero commissions, you can check out Robinhood.

Does Nu Holdings Have a Competitive Edge?

This is what sealed the deal for me. NU isn’t just another online bank—it’s the largest digital bank in Latin America with over 110 million customers across Brazil, Mexico, and Colombia.

A huge portion of the population in these countries is either underbanked or completely unbanked. NU is stepping in to fix that with no-fee accounts, a seamless app, and better loan rates than traditional banks. This isn’t just a nice-to-have service—it’s a necessity for millions of people.

The numbers prove it. NU is adding millions of new customers every quarter, and its loan business is expanding fast. If it keeps up this pace, traditional banks are going to have a tough time competing.

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Is Nu Holdings Overpriced?

Here’s the tricky part. NU is definitely not a cheap stock. It’s currently trading at a P/E ratio of 37.68, which is way higher than the industry average of 8.95. The P/S ratio is 12.02, meaning people are paying a premium for its revenue growth.

But here’s the thing—when I dug deeper, I found that NU’s PEG ratio (which compares price to growth) is just 0.47. A PEG under 1 suggests that NU is actually undervalued relative to its earnings growth. So while the stock looks expensive on the surface, if they keep growing like this, today’s price will probably look like a bargain in a few years.

What is the Target Price for NU?

Right now, analysts have set an average 12-month price target of $15.63, which would be about 13.8% higher than its current price of $13.73. Price targets range from $9.00 on the low end to $18.90 on the high end, so opinions are a bit mixed.

I don’t think NU is a stock that’s going to double overnight, but as long as they keep delivering strong earnings, I expect it to steadily climb over time.

Is NU a Good Stock Buy?

For me, the answer is yes. NU has everything I look for in a growth stock—huge revenue expansion, strong profitability, and a dominant market position in a fast-growing sector.

I don’t expect it to double overnight, but I do think it has serious long-term upside.

What’s My Plan?

I’m starting a position now because I believe NU is going to keep outperforming expectations. Here’s how I’m playing it:

• Buying before earnings – I think they’ll at least meet expectations, and I want to get in before momentum picks up again.
• Adding more if the stock dips – If there’s a short-term pullback, I’ll be looking to pick up more shares.
• Holding for midterm growth – As long as NU keeps executing, I’ll be holding for at least the next 1-3 years.

If you like high-growth plays, NU reminds me of how CrowdStrike is dominating cybersecurity (check out my CrowdStrike breakdown). It’s one of those stocks that could keep running higher as it proves itself quarter after quarter.

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This isn’t a stock for conservative investors, but if you’re okay with some volatility and want exposure to a high-growth fintech in Latin America, NU is definitely worth a look.

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