Nu Holdings, the rapidly expanding fintech powerhouse, has successfully brought digital banking to millions across Latin America. While its stock recently lagged the broader market and even saw Berkshire Hathaway liquidate its stake, a deeper dive reveals a company aggressively expanding beyond Brazil into untapped markets like Mexico and Colombia, and diversifying its service offerings. This strategic long-term vision, coupled with solid underlying growth fundamentals, suggests that the current dip might present a unique buying opportunity for patient investors.
In the dynamic world of fintech, few companies have demonstrated the meteoric rise of Nu Holdings (NYSE: NU). From its origins as a challenger bank in Brazil, it has rapidly expanded its reach, bringing essential financial services to millions who were previously unbanked or underbanked. This impressive journey has captivated investors, but recent market movements, including a period of underperformance against the S&P 500 and the high-profile exit of early investor Berkshire Hathaway, have sparked questions about its future trajectory. Is this a signal of peak growth, or merely a temporary setback for a company still poised for significant long-term success?
Nu’s Unstoppable Rise in Brazil: A Foundation of Digital Trust
Nu Holdings’ initial success story is rooted in Brazil, where its digital-only bank, NuBank, revolutionized access to financial services. By offering no-fee credit cards and streamlined online services, Nu quickly captured a significant portion of the market. From the end of 2021 to the second quarter of 2025, the company’s total customer base soared from 53.9 million to an astounding 122.7 million. Its activity rate, which measures active customers, also rose from 76% to 83%, demonstrating strong engagement. Over the same period, the average revenue per customer (ARPAC) impressively climbed from $4.50 to $12.20.
This rapid adoption translated into stellar financial performance, with revenue growing at a compound annual growth rate (CAGR) of 89% from 2021 to 2024. The company achieved profitability on a generally accepted accounting principles (GAAP) basis in 2023, and its earnings per share nearly doubled in 2024. However, with nearly 105 million customers in Brazil, representing 59% of the country’s adult population as of its latest quarter, concerns have emerged about market saturation and the potential deceleration of its growth within its home turf.
The Berkshire Hathaway Shadow: Why Buffett’s Exit Might Not Signal Trouble
One of the most talked-about events regarding Nu Holdings recently was the decision by Warren Buffett’s Berkshire Hathaway to liquidate its entire stake in the fintech. Berkshire was an early investor, purchasing shares before Nu’s initial public offering (IPO) in 2021. Their subsequent exit in the first quarter, after navigating significant volatility, has understandably made some investors nervous.
Many in the investment community believe that Nu’s initial investment by Berkshire was likely driven by one of Buffett’s investment managers, Todd Combs or Ted Weschler, given that Nu’s profile as a newer company in a relatively new market deviates from Buffett’s traditional investment criteria. Reasons for the sale could include the belief that Nu’s period of hyper-growth is over, or concerns over its valuation. The stock trades at a price-to-sales ratio of 7 and a price-to-earnings ratio of nearly 28, which is considered pricey compared to established banks. However, for investors with a different risk appetite and a longer time horizon, Berkshire’s sale, while noteworthy, doesn’t necessarily invalidate Nu’s long-term potential. It often reflects specific portfolio management strategies or differing outlooks on growth cycles.
Beyond Brazil: Charting New Territories in Latin America
Recognizing the eventual saturation of its home market, Nu Holdings has strategically set its sights on expanding into other key Latin American markets, notably Mexico and Colombia. This geographic diversification is a critical component of its future growth strategy. In Mexico, Nu initially operated as a popular financial society (SOFIPO), offering basic services like deposit accounts and credit cards. A significant milestone occurred in April when Nu Mexico received approval from the Mexican National Banking and Securities Commission to transition into a full-service bank. This development, as reported by Nu Holdings’ official investor relations, will allow the company to offer a much wider array of products, including payroll accounts, mortgage and auto loans, and various investment options, reaching millions of unbanked and underbanked individuals across the country.
Latin America presents immense opportunities for digital banking platforms like Nu. According to World Bank data, a substantial portion of the population in the region remains unbanked or underbanked, indicating a vast addressable market for accessible financial services. By replicating its successful Brazilian model in Mexico and Colombia, Nu aims to tap into these underserved populations and fuel its next phase of rapid customer and revenue growth.
Diversifying the Digital Ecosystem: Nu’s Vertical Expansion
Beyond traditional financial products, Nu is also aggressively expanding its service offerings into new verticals, aiming to create a comprehensive digital ecosystem for its growing customer base. These new offerings include:
- Nupay: Facilitating easy digital payments for online and in-store shopping.
- Nu Travel: An integrated platform for planning and booking flights, hotels, and other travel needs directly through the app.
- Nu Marketplace: A shopping platform providing a wide variety of products and services.
- Nu Cel: A mobile phone service, further embedding Nu into its customers’ daily lives.
CEO David Vélez has expressed enthusiasm for these expansions, stating on a recent earnings call, “We think that there is a big opportunity to go beyond financial services in new verticals that allows us to give more products and services to our customers.” This strategic move is designed not only to boost revenue but also to stabilize earnings, providing a buffer during economic downturns when financial companies typically face cyclical challenges.
Unpacking the Numbers: Growth, Profitability, and Valuation
While Nu’s growth rates have decelerated from their peak, they remain impressive. From Q2 2024 to Q2 2025, customer growth slowed from 25% to 17% year-over-year, and currency-neutral revenue growth from 65% to 40%. This cooling off is partially attributable to Brazil’s market saturation and increased competition from rivals like MercadoLibre’s Mercado Crédito. However, the company has successfully maintained its activity rate and seen ARPAC rise, while average costs to serve each customer have remained steady.
Nu’s journey to profitability is a key indicator of its maturing business model. After posting a net loss of $9.1 million in 2022, it reported positive GAAP net income in 2023. In the third quarter of last year, net income surged 83% year-over-year to $553 million, achieving a healthy 18.8% margin. Strong unit economics are at play, with ARPAC reaching $11 in Q3 (up 25% currency-neutral) while the cost to serve the average customer was just $0.80. Operating expenses as a percentage of revenue also declined to 21% from 24% in Q3 2023, showcasing operational leverage.
From a valuation perspective, Nu’s forward price-to-earnings ratio of 20.3 is notably below its historical average and represents about a 10% discount to the broader S&P 500. This could present a compelling entry point for long-term investors, especially when considering Wall Street analysts’ forecasts of a 28% CAGR for revenue and a 38% CAGR for EPS between 2024 and 2027. While technical indicators show a mixed picture, with some signals pointing to “sell” (like MACD and CCI) and others strongly to “buy” (most moving averages), the overall technical consensus tends to lean bullish, suggesting underlying strength despite short-term fluctuations.
The Long-Term Investor’s Perspective: Is Nu a Buy Now?
Nu Holdings stands at an interesting crossroads. The initial hyper-growth phase in Brazil is maturing, leading to some deceleration and pressure on margins as it expands into newer, higher-cost markets like Mexico and Colombia. The exit of a prominent investor like Berkshire Hathaway also warrants attention. However, for a community focused on in-depth financial analysis and long-term investment strategy, Nu’s story is far from over.
The company’s proven ability to penetrate challenging markets, its recent regulatory approval for full-service banking in Mexico, and its strategic diversification into non-financial verticals paint a picture of a resilient and adaptable fintech leader. These initiatives are designed to create new growth engines and stabilize its business model, moving it beyond a purely transactional banking service to a holistic digital lifestyle platform. While risks associated with economic volatility in Latin America and intense competition persist, Nu’s discounted valuation relative to its projected growth rates makes a strong case for accumulation by long-term investors who believe in the continued digital transformation of financial services in emerging markets.
