4 Reasons to Buy Nu Holdings Stock Like There's No Tomorrow

Core Insights - Nu Holdings' third-quarter financial results showed strong growth metrics, yet the market reacted negatively, with shares down 35% from their peak [1] - The company had its IPO in December 2021, coinciding with the end of a stock market bull run and the beginning of aggressive rate hikes by the Federal Reserve, indicating a potential misalignment in timing [2] - Warren Buffett's investment in Nu provides confidence to retail investors, given his expertise in financial services [3] Financial Performance - Nu generated $2.9 billion in revenue in Q3, representing a 512$553.4 million in Q3, an 83% year-over-year increase, indicating a scalable business model with margin expansion [5] - Wall Street analysts project Nu's earnings per share to grow at a compound annual rate of 38.6% from 2024 to 2026, reflecting a robust growth outlook [10] Market Position and Opportunities - Nu is recognized as the world's largest digital banking platform outside of Asia, offering a range of financial products without physical branches, benefiting from increased smartphone and internet usage in its operating countries [8] - There remains a significant opportunity for expansion, with 70% of the Latin American population being unbanked or underbanked, and Nu currently operating in only three countries [15] - The company's unit economics are strong, with a monthly average revenue per customer of $11 in Q3, up 10% year-over-year, while the average cost to serve dropped by 22% [16] Valuation - Nu shares are currently trading at a forward price-to-earnings (P/E) ratio of 23.7, which is a 16% discount compared to the Nasdaq 100 Index and only a slight premium to the S&P 500, making the valuation attractive for potential investors [17]