Even though it has a huge market cap of $84 billion, Nu Holdings (NU +0.11%) might be a business that most investors in the U.S. have never heard of. That's because the innovative financial services enterprise only has a presence in Latin America. But don't let that discourage you from taking a closer look for your own portfolio's sake.
Is this flourishing fintech stock a buy now?
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Nu pounced on a lucrative opportunity
A large percentage of the population in Latin America was, and continues to be, unbanked and underbanked. This means they don't have easy access to basic checking and savings accounts or credit.
Nu spotted a lucrative opportunity to serve these people. The timing was impeccable as well. The business was founded in 2013, so it benefited from improving internet connectivity and greater smartphone penetration. As a digital bank, this laid the foundation for Nu's success.
As you can imagine, growth has been through the roof. Nu's revenue increased 42% year over year in the third quarter of 2025. It now has 127 million customers combined in its three markets of Brazil, Mexico, and Colombia.
Investors can't gloss over the income statement. Nu's net profit margin was 18.8% in the third quarter. And it should improve as the company scales up. The business generates almost 15 times more average monthly revenue per active customer than the cost it takes to serve them, supporting outstanding unit economics.
Nu's profitability is a clear sign that it's developing a cost advantage. With a growing customer base and increasing revenue, the company can more effectively spread its expenses, for things like marketing and product development, to generate a rising earnings stream. Sell-side analysts believe earnings per share will grow at a faster rate than revenue between 2024 and 2027.
NYSE: NU
Key Data Points
Stacking the odds in investors' favor
Nu has been a fantastic investment. In the past three years, the stock has skyrocketed 357% (as of Jan. 21). When the company continues to report impressive fundamental performance, this type of gain for the share price might not be too surprising. Investors could believe that it's too late to buy the stock, however.
And there are risks worth identifying. Nu's growth will probably eventually moderate in the years ahead, as it further penetrates key markets in Latin America. There is competition that also spots the same opportunities. And as an emerging region, Latin America presents certain geopolitical and macro risks that aren't a concern in the U.S.
You're mistaken, though, if you've adopted a pessimistic perspective. The business is operating at full strength. And Nu's valuation still presents a compelling opportunity. The stock trades at a forward price-to-earnings ratio of 21.1. Investors should buy shares.
