Nu Holdings (NU 0.57%) owns NuBank, the largest digital-only bank in Latin America. By streamlining its online services, it expanded much faster than its regional brick-and-mortar competitors. From 2021 to 2025, its year-end customer base expanded from 54 million to 131 million, its activity rate (active customers divided by total customers) improved from 76% to 83%, and its average revenue per customer (ARPU) more than tripled from $4.50 to $15.
However, most of Nu's customers are in Brazil. To curb its dependence on that saturated market, where it already serves more than half of the country's adult population, it's aggressively expanding in Mexico. Still, that closely watched expansion could face some tough challenges.
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What challenges does Nu face in Mexico?
Nu served 15 million customers in Mexico in the first quarter of 2026, up from 6.6 million customers in the first quarter of 2024 and 2.1 million customers in the first quarter of 2022.
However, Nu's customers in Mexico have a much higher non-performing loan (NPL) rate than its customers in Brazil. Therefore, its credit risk is rising as it prioritizes its market share growth over the reliability of those new customers.
NYSE: NU
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It's also spending more money in Mexico to cross-sell additional products (credit cards, bank deposits, loans, and other financial services) to grow its revenue per customer. Those investments could drive up its average cost per active customer -- which has held fairly steady since its IPO in 2021, even as it gained more customers and launched new services.
Nu recently cleared a major regulatory hurdle toward becoming a full-fledged bank in Mexico. A full authorization would give it access to even more customers, but it would also burden it with tighter regulations, capital requirements, and other banking expenses. At the same time, it faces intense competition from other Latin American fintech leaders -- like MercadoLibre -- as they carve up Mexico's lucrative digital banking market
Nu's investments in Mexico could eventually pay off, but they contradict its traditional strategy of quickly acquiring new customers and leveraging scale to reduce customer acquisition costs.
Is Nu's stock worth buying?
That pressure, along with the persistent macro headwinds in Latin America, caused Nu's stock to decline 23% this year. But after that pullback, it trades at just 15 times this year's earnings.
That's a bargain-bin valuation for a company expected to grow revenue and EPS at CAGRs of 29% and 35%, respectively, from 2025 to 2028. So if you expect Nu's investments in Mexico to pay off over the next few years, it's still a great time to buy its unloved stock.
