Nu Holdings: A Calculated Flutter?

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January, as any seasoned accountant will tell you, is the month when the numbers start to glare back, demanding attention. It’s the fiscal equivalent of a particularly judgmental gargoyle. And so, we find ourselves peering at Nu Holdings, a digital bank originating from the vibrant, and often unpredictable, lands of Latin America. They claim to be disrupting the established order, which, naturally, makes everyone nervous. Especially the established order. Their share price, it must be admitted, has performed a rather enthusiastic jig these past three years – a 350% ascent, if the scribes are to be believed. A commendable effort, though one always suspects gravity will eventually assert itself.

Nu Holdings: Taming the Financial Jungle

Nu operates, shall we say, a mostly-digital banking platform. It serves those in Latin America who, until recently, were largely ignored by the traditional financial institutions. Think of it as bringing a polite, app-based shop to a place where the only previous offering was a rather gruff, heavily-guarded fortress. The region is, as anyone who’s bothered to look at a map will confirm, teeming with individuals who are either unbanked or, at best, underbanked. A fertile ground, then, for a disruptor. They’re leveraging the ubiquity of mobile phones and the internet – technologies that, in some places, are more common than running water – to reach these customers. A noble endeavor, if one ignores the inevitable data harvesting.

Their revenue increased by a respectable 31% year-over-year, reaching $11.1 billion in the first nine months of 2025. They’ve accumulated a staggering 127 million customers, adding 17.3 million in the last year. A considerable achievement, though one wonders if they’re counting anyone with a vaguely-remembered login as a customer. They claim 60% of the adult Brazilian population as clients.1 A statistic that, naturally, requires a pinch of salt the size of a small boulder. Add to that another 17 million across Mexico and Colombia, and you have a burgeoning empire built on…well, on bits and bytes, mostly.

The company is, undeniably, profitable. They reported $2 billion in net income for the first nine months of 2025. This is largely due to their remarkably efficient unit economics. It costs them a mere $0.90 per customer per month to keep the digital wheels turning. Meanwhile, they’re extracting $13.40 per active customer. A rather healthy margin, if you don’t dwell too much on the methods used to achieve it. It makes perfect sense, then, that their priority is to add more customers. Quantity, as any seasoned magician knows, is often more impressive than quality.

The leadership, naturally, is looking to the future. And, unsurprisingly, that future involves Artificial Intelligence.2 Their CEO, David Vélez, proclaimed a vision of becoming “AI-first,” integrating “foundation models deeply into our operations.” A phrase that sounds impressively futuristic, but mostly means they’re hoping a clever algorithm will cover up any underlying inefficiencies.

The Dragons and the Gold

Nu’s success is, admittedly, noteworthy. But it’s not without its perils. Competition, for example. MercadoLibre and Itau Unibanco are established financial behemoths, and they’re not likely to surrender their territory without a fight. One expects they’re sharpening their digital swords as we speak. Furthermore, the financial landscape of Latin America is, shall we say, dynamic. New players are bound to emerge, sensing an opportunity to capitalize on the region’s untapped potential.

And, as any prudent banker will tell you, macroeconomic risks are ever-present. Lending money, even in the digital realm, is inherently risky. Interest rates fluctuate, economic growth stalls, unemployment rises. These are the dragons guarding the gold, and they can strike without warning. It’s crucial, therefore, to adopt rigorous credit standards, especially when dealing with customers who may be new to the world of financial services.

Furthermore, Latin America isn’t exactly a bastion of stability. Political unrest, currency fluctuations, and unpredictable regulatory changes are all part of the package. It’s a region where things can, and often do, go sideways with alarming speed.

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To Buy or Not to Buy? That is the Question. (Or, at Least, a Mild Consideration.)

Waiting for Nu to report its Q4 financials on February 25th might seem like a sensible course of action. After all, having access to the latest data – customer growth, revenue, net income, and so on – would allow for a more informed decision. But frankly, I suspect the numbers will be presented in a manner designed to elicit precisely the response the company desires.3

Therefore, I don’t believe waiting is essential. The company continues to demonstrate impressive financial gains, and that trend is likely to continue – barring a major economic upheaval. And, at a forward price-to-earnings ratio of 20.7, the market appears to be offering a reasonable deal. Though, of course, “reasonable” is a subjective term, particularly when dealing with speculative investments.

In conclusion, Nu Holdings is a fascinating, if somewhat precarious, enterprise. It’s a gamble, certainly. But then, aren’t all investments? Just remember to approach it with a healthy dose of skepticism, and a firm grasp on the fact that the house always has an edge.


1 This figure is likely calculated using a definition of “customer” that is… generous. Perhaps anyone who once downloaded the app counts?
2 AI is the new alchemy, promising to turn base data into financial gold. The results, however, are often less impressive than the hype.
3 Numbers, like stories, can be told in a way that emphasizes certain aspects while conveniently omitting others.

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2026-01-18 20:02