Time to Buy the Dip on Nu Stock?

Company Overview - Nu Holdings provides digital banking and financial services in Brazil, Mexico, and Colombia, focusing on regions with significant entry barriers for traditional banking customers [2] - The company has reported consistent solid quarterly growth, benefiting from the low digital financial access in its operating regions, which offers a healthy growth runway [2] Financial Performance - In Q4 2024, Nu's revenue increased by 50% year-over-year on a currency-neutral basis, with net income rising from $360.9 million to$552.6 million [3] - The cost to serve remained stable at $0.80 per customer, down from$0.90 the previous year [3] Market Position and Growth Potential - Nu has captured 58% of Brazil's adult population as customers, adding 1 million new members monthly, and 61% of its monthly active users utilize Nu as their primary banking account [4] - The company is the third-largest bank in Brazil by membership, with significant growth potential remaining in the market [4] - In Mexico, Nu ended 2024 with 10 million customers, a 91% year-over-year increase, representing 12% of the adult population [5] Competitive Advantages - Nu's low-overhead model yields a high return on equity (ROE) of 28% in 2024, placing it among the top tier of financial institutions globally [6] - The company has a modest presence in Mexico and Colombia, where it is experiencing faster growth than in Brazil, particularly with the rollout of a high-rate savings account [5] Stock Performance and Valuation - Despite a recent stall in stock performance, with a 26% decline from recent highs, Nu's stock is considered attractive at its current price, trading at a forward price-to-earnings ratio of 15 [8] - The market's reaction to Nu's stock has been influenced by external factors, including Berkshire Hathaway selling a portion of its position and economic volatility in Brazil [7] Long-term Outlook - The company has a large market opportunity and is expanding rapidly, suggesting that long-term investors may be well-rewarded if they hold the stock for several years [9]