Digital bank Nu Holdings (NU 2.00%) has a market capitalization of $72 billion -- and that makes it a sizable business. However, many American investors might not know that much about the company because it operates in Latin America and has no U.S. presence.
Here's a perfect example of why it's important to understand that there are investment opportunities in international markets. This fintech stock might prove that point. Should you buy Nu Holdings while it's trading below $16? Here's why that might be a smart decision.
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Customer additions and revenue growth are through the roof
The market loves a good growth story -- and Nu Holdings is exactly that. The company's customer base went from 65 million at the end of Q2 2022 to 123 million as of June 30. In Nu's home country of Brazil, the business counts 60% of the adult population as its customers. Newer markets of Mexico and Colombia are registering remarkable success, even though Nu's penetration is still in the early stages in these countries.
Nu is benefiting from some notable tailwinds. It helps that internet and smartphone penetration in Latin America continue to grow. This provides a favorable backdrop for a digital-only bank like Nu to find broader adoption.
Essentially, Nu is riding the wave of the Latin American economy's development. Given that a large portion of the population here is still unbanked or underbanked, Nu still has lots of potential for growth.
The company's revenue increased 29% year over year in Q2. Wall Street consensus sell-side analyst estimates believe the top line will rise by 67% between 2025 and 2027. That outlook should make shareholders excited.
Nu's focus on product innovation should help it reach more customers. Management has also hinted at entering new countries in the future, basically replicating strategies that have worked so well in its existing markets.
This is an extremely profitable enterprise
Companies that have access to cheap capital usually care about growth more than anything else when it comes to strategic priorities. That's why over the past decade or so, some businesses have put up huge gains, adding customers and increasing sales rapidly. The issue, however, is that these companies don't care about profits.
Nu bucks this trend and stands out. It's an extremely profitable enterprise, which might be a surprise to many. Nu registered $1.2 billion in net income through the first six months of 2025. That translated to a phenomenal net profit margin of 17.4%. The margin has generally increased in recent years, which underscores the company's ability to scale up in a lucrative manner.
Investors should pay attention to the unit economics. It cost the company $0.80 per month in Q2 to serve the average customer. But on the flip side, the average revenue per active customer came in at $12.20. After viewing these two figures, it makes sense why the leadership team is trying to grow so quickly.
Nu also has the advantage of not running any physical bank branches. A brick-and-mortar retail strategy like this would entail sizable operating expenses. Nu avoids this, which can help drive higher margins over time.
This fintech stock trades at a reasonable valuation
In the past three years, Nu's shares have skyrocketed 262% (as of Oct. 16), thanks to incredible fundamental performs that has caught the market's attention. After such a phenomenal gain, investors might be questioning the stock's appeal. The last thing you'd want to do is overpay.
That's certainly not the case here. The valuation still looks very compelling. Investors can buy the stock at a forward price-to-earnings ratio of 18.7. At under $16 per share, there is sizable upside over the next five years from the possibility of both higher earnings and valuation expansion.
