Nu Holdings (NU) AI Stock Analysis

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Nu Holdings

(NYSE:NU)

Rating:75Outperform

Price Target:

$14.00

▲(9.80%Upside)

Nu Holdings' strong financial performance and positive earnings call highlights are significant strengths, driving the stock's potential. Technical indicators support a bullish outlook, though the valuation appears stretched, and caution is advised due to increased credit loss allowances and funding pressures.

Positive Factors

AI and Technology

Nubank's newer predictive AI models have unlocked stronger statistical performance than expected, accelerating both credit limit increases and loan growth.

Competitive Advantage

Nubank's digital, direct-to-consumer model enables it to bypass traditional brokers, offering rates 15-30% below peers, which is a significant pricing advantage.

International Expansion

Mexico remains Nubank's most important international initiative, with the bank expecting accelerating momentum driven by scale in credit cards and improving funding costs.

Negative Factors

Investment Business

The investments business has lagged expectations, and Nubank's platform is still not meeting the needs of its high-income user base.

Market Skepticism

Since launching its payroll loan product, Nubank's expansion has been gradual, fueling skepticism that the product may not scale meaningfully.

Nu Holdings (NU) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$61.44B

Dividend YieldN/A

Average Volume (3M)78.30M

Price to Earnings (P/E)28.5

Beta (1Y)1.29

Revenue Growth33.20%

EPS Growth68.09%

CountryUS

Employees5,403

SectorFinancial

Sector Strength72

IndustryBanks - Diversified

Share Statistics

EPS (TTM)0.11

Shares Outstanding3,768,057,900

10 Day Avg. Volume84,279,716

30 Day Avg. Volume78,299,769

Financial Highlights & Ratios

PEG Ratio2.95

Price to Book (P/B)7.20

Price to Sales (P/S)0.00

P/FCF Ratio16.20

Enterprise Value/Market Cap0.77

Enterprise Value/Revenue21.10

Enterprise Value/Gross Profit-2.19K

Enterprise Value/Ebitda-76.81

Forecast

1Y Price Target

$15.80

Price Target Upside23.92% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering5

Nu Holdings Business Overview & Revenue Model

Company DescriptionNu Holdings Ltd. operates as a digital financial services platform and technology company primarily in Brazil, Mexico, and Colombia. It offers Nu credit and debit cards; Ultraviolet credit and debit cards; and mobile payment solutions for NuAccount customers to make and receive transfers, pay bills, and make everyday purchases through their mobile phones. The company provides savings solutions, such as Nu Personal Accounts, a digital account solution that supports all personal finance activities, from daily purchases and money transfers to savings; and Nu business accounts designed specifically for entrepreneur customers and their businesses. In addition, it offers NuInvest, an investment product that provides equity, fixed-income, options, and ETF products, as well as multimarket funds with curated asset allocations based on the customer's risk profile and financial position; personal unsecured loans; in-app buy now pay later' solution for Nu card customers to pay credit and debit purchases, and banking payment slips over time in up to twelve installments; and NuInsurance protecting solutions to help its customers secure life insurance and funeral benefits. The company was founded in 2013 and is headquartered in Sao Paulo, Brazil.

How the Company Makes MoneyNu Holdings makes money primarily through the interest earned on loans and credit card balances, as well as through fees associated with its financial products. The company earns interchange fees from transactions made using its credit cards. In addition, Nu Holdings offers personal loans, from which it derives interest income. The company leverages its large customer base and data-driven approach to cross-sell products and services, enhancing its revenue streams. Partnerships with various financial institutions and technology providers also play a role in expanding its offerings and boosting income.

Nu Holdings Key Performance Indicators (KPIs)

Any

Total Customers

Total Customers
Counts the total number of customers, showing the company’s market reach and potential for cross-selling opportunities.

Chart InsightsNu Holdings continues its robust customer growth trajectory, adding 4.3 million customers in Q1 2025, reaching 119 million. This growth is fueled by strong expansion in Brazil, Mexico, and Colombia, with Mexico seeing a 70% increase over the past year. Despite challenges like increased credit loss allowances and funding cost pressures, the company maintains a high engagement rate and strategic focus on expanding its digital banking footprint. The recent banking license in Mexico is poised to further accelerate growth and enhance product offerings.

Data provided by:

Main Street Data

Nu Holdings Earnings Call Summary

Earnings Call Date:May 13, 2025

(Q1-2025)

% Change Since: -2.97%|

Next Earnings Date:Aug 14, 2025

Earnings Call Sentiment Positive

The earnings call reflects strong customer growth and expansion, particularly in Mexico, along with significant improvements in operating efficiency and net income. However, there are challenges related to credit loss allowance increases and funding cost pressures in emerging markets.

Q1-2025 Updates

Positive Updates

Strong Customer Growth

NU Holdings added 4.3 million customers in Q1 2025, reaching a total of 119 million across all markets, with significant increases in Brazil, Mexico, and Colombia.

Expansion in Mexico

Customer base in Mexico grew by 70% over the past four quarters, with deposits exceeding $5 billion and revenues reaching $245 million.

Record Loan Origination

Total loan originations hit a record $20.2 billion, increasing by 64% year-over-year, driven by strong unsecured loan performance.

Operating Efficiency Improvement

Efficiency ratio improved to 24.7%, a 740 basis point improvement year-over-year, showcasing operational efficiencies.

Net Income Growth

Net income increased by 74% year-over-year, reaching $557 million, with an annualized ROI of 27%.

New Banking License in Mexico

NU Holdings received a banking license in Mexico, which will accelerate growth and product offerings.

Negative Updates

Credit Loss Allowance Increase

Higher credit loss allowance in Q1 impacted gross profit margins, leading to a 3% sequential decline in gross profit.

Seasonal NPL Increase

NPLs in the 15 to 90-day category increased by 60 basis points to 4.7%, reflecting typical Q1 seasonality.

Funding Cost Pressure in Mexico and Colombia

Investments in building local deposit franchises in Mexico and Colombia led to short-term pressure on net interest margins.

Company Guidance

During the first quarter of 2025, NU Holdings reported significant growth and expansion, adding 4.3 million customers to reach a total of 119 million across Brazil, Mexico, and Colombia. In Brazil, they now serve approximately 59% of the adult population, with 85% of these customers being active users. NU Holdings also achieved a monthly active customer activity ratio above 83%, reflecting deep engagement. In Mexico, customer growth surged by 70% over the past four quarters, reaching 11 million customers and exceeding $5 billion in deposits on an FX-neutral basis. The company's consolidated net interest income (NII) grew by 34% year-over-year, reaching $1.8 billion, although consolidated net interest margins (NIM) slightly declined to 17.5%. NU's credit portfolio expanded to $24.1 billion, driven by a strong 64% year-over-year increase in total loan originations. Despite a 3% sequential decline in gross profit due to higher credit loss allowances, NU maintained a robust 27% annualized return on equity (ROE). The company emphasized its strategic focus on Brazil, Mexico, and Colombia, highlighting the opportunity to further grow revenue and improve operating leverage. Looking forward, NU aims to continue investing in its growth, with a particular emphasis on secured lending opportunities and expanding its digital banking footprint across Latin America.

Nu Holdings Financial Statement Overview

Summary

Nu Holdings demonstrates strong financial performance with significant revenue growth, improved margins, and a shift to profitability. The balance sheet is stable with a strong cash position, though there's room for improvement in asset utilization. Cash flow generation is robust, supporting operational and strategic initiatives.

Income Statement

Very Positive

Nu Holdings has demonstrated strong revenue growth with a significant increase in total revenue over the years from $737M in 2020 to $11.61B TTM. The gross profit margin has been consistently healthy, indicating effective cost management. Furthermore, the company turned its net income from a loss in 2022 to a significant profit of $2.15B TTM. The EBIT and EBITDA margins have also improved, reflecting solid operational efficiency.

Balance Sheet

Positive

The balance sheet shows a solid equity position with an equity ratio of 15.9% TTM. The debt-to-equity ratio is relatively low at 0.10, indicating conservative leverage. A strong cash position with $27.07B in cash and equivalents further supports financial stability. However, the equity ratio suggests room for improvement in asset utilization.

Cash Flow

Very Positive

Operating cash flows have been robust, growing to $4.06B TTM from $755M in 2022, indicating strong cash generation from operations. Free cash flow improved significantly, showing positive growth and the company has maintained a healthy operating cash flow to net income ratio. This reflects efficient conversion of income to cash, supporting liquidity and potential for reinvestment.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	11.10B	7.67B	4.52B	1.51B	574.99M
Gross Profit	5.10B	3.35B	1.57B	664.56M	190.43M
EBITDA	2.87B	1.60B	35.27B	-152.82M	-185.75M
Net Income	1.97B	1.03B	-364.58M	-164.99M	-171.49M
Balance Sheet
Total Assets	49.93B	43.35B	29.93B	19.86B	10.15B
Cash, Cash Equivalents and Short-Term Investments	23.15B	22.02B	16.84B	10.69B	2.39B
Total Debt	886.53M	1.17B	803.16M	167.92M	189.21M
Total Liabilities	42.28B	36.94B	25.04B	15.42B	9.72B
Stockholders Equity	7.65B	6.41B	4.89B	4.44B	438.11M
Cash Flow
Free Cash Flow	2.22B	1.09B	641.27B	-2.95B	966.53M
Operating Cash Flow	2.40B	1.27B	755.57B	-2.92B	974.52M
Investing Cash Flow	-330.63M	-177.00M	-127.15B	-154.19M	-16.27M
Financing Cash Flow	727.74M	425.21M	654.04B	3.34B	240.10M

Nu Holdings Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price12.75

Price Trends

50DMA

12.76

Negative

100DMA

12.00

Positive

200DMA

12.45

Positive

Market Momentum

MACD

0.07

Positive

RSI

46.05

Neutral

STOCH

7.67

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NU, the sentiment is Neutral. The current price of 12.75 is below the 20-day moving average (MA) of 13.32, below the 50-day MA of 12.76, and above the 200-day MA of 12.45, indicating a neutral trend. The MACD of 0.07 indicates Positive momentum. The RSI at 46.05 is Neutral, neither overbought nor oversold. The STOCH value of 7.67 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for NU.

Nu Holdings Risk Analysis

Nu Holdings disclosed 1 risk factors in its most recent earnings report. Nu Holdings reported the most risks in the "Legal & Regulatory" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Nu Holdings Peers Comparison

Overall Rating

UnderperformOutperform

Sector (68)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BBVA	82 Outperform	$86.98B	7.97	19.22%	0.41%	19.48%	26.26%
SAN	78 Outperform	$132.20B	9.56	13.25%	0.39%	0.26%	19.35%
NWG	77 Outperform	$54.77B	9.22	13.70%	3.88%	18.85%	14.85%
BCS	76 Outperform	$68.28B	9.87	9.36%	0.14%	11.33%	47.74%
NU	75 Outperform	$61.44B	28.47	27.91%	―	33.20%	68.09%
ING	75 Outperform	$70.85B	11.21	11.92%	0.26%	-0.63%	-6.01%
Sector *	68 Neutral	$17.10B	11.44	9.70%	3.58%	11.11%	-4.78%

* Financial Sector Average

Performance Comparison

Nu Holdings

12.75

0.34

2.74%

BBVA

Banco Bilbao

15.23

4.85

46.72%

BCS

Barclays

19.40

7.77

66.81%

ING

ING Groep

23.69

6.24

35.76%

NWG

NatWest Group

13.57

4.52

49.94%

SAN

Banco Santander SA

8.88

4.09

85.39%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 25, 2025