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 (NU -6.03%). 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.
What's Nu?
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.
The time is right... and so is the place
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.
There are some important differences between here and there, however. Chief among them is the fact that, unlike North America, Latin America is developing as a mobile-first market, meaning most consumers' smartphones are their primary -- and often only -- means of connecting to the internet.
Image source: Getty Images.
The inevitable outcome is the same though. That is, it's only a matter of time before merchants and sellers refine their ability to connect with and sell to online shoppers -- shoppers who are looking for the same convenience that U.S. consumers were during the early days of e-commerce. This trend drives demand not only for more convenient online payment options, but for better all-around digital banking service.
To this end, research firm Imarc expects Brazil's neobanking (digital-only banking) industry to grow at an annualized pace of nearly 45% through 2033.
And Nu certainly seems positioned to capture at least its fair share of this growth, if its recent and not-so-recent growth is any indication. For perspective, during the past five years Nubank helped nearly 21 million Brazilians get their very first credit card. The countries around Brazil will of course eventually follow their neighbor's lead.
But is Nu stock promising enough to buy for the long haul?
The question remains, however -- could buying Nu stock today set you up for life? In other words, is it apt to serve up enormous, explosive gains the same way Amazon did?
Never say never, but probably not.
Don't misunderstand. It's a fantastic stock with a ton of long-term upside potential. It's even got a healthy degree of short-term upside, with the stock's recent price of a little more than $12 per share being measurably less than analysts' average target of $14.15. It's also rated a buy, even if not a strong buy. The already profitable outfit is expected to increase its per-share results by more than 40% every year for the next three years as well. You would be hard-pressed to find a stock with a similar risk-versus-reward profile.
Data sources: Historical data from Macrotrends. Projected data from StockAnalysis.com. Chart by author.
This is also a business, however, that's starting to draw a serious crowd of competitors. For instance, Latin America's e-commerce powerhouse MercadoLibre saw a 43% uptick in the total amount of payment volume its tech facilitated during the first quarter of this year. At the same time, Brazil's biggest conventional bank, Itaú Unibanco, is now partnering with Wise Platform to offer cross-border payment processing to its Brazilian business customers after debuting what it calls a digital banking "superapp" for consumers last year.
Bottom line? Nu Holdings stock is apt to be a solid speculative winner for a long while, even if not a life-changing investment. You need those kinds of picks, too, if only for the sake of diversifying your aggressive growth holdings. Just be prepared for plenty of continued volatility. This has been one of those tough-to-stick-with stocks even if it has been worth it.
