Cathie Wood and Warren Buffett are at opposite ends of the spectrum of investing styles. While Buffett’s value investing style has led him to amass a cult-like following in the investing world over several decades, Wood’s outsized bets on innovative companies expected to witness surreal growth rates have made her a popular figure among the newbie investors cohort.
When both styles converge to sound bullish about a particular fintech stock, it warrants a deeper look as both have been holding a sizeable chunk of the company’s shares since its IPO in 2021.
About Nu Holdings Stock
Founded in 2013, Nu Holdings (NU) is a prominent digital financial services platform in Latin America. The company offers a range of financial products, including a no-fee international credit card, digital accounts (NuConta), personal loans, life insurance, and investment services.
Valued at a market cap of $53.4 billion, NU stock is up 11.34% on a YTD basis.
So, what is making two seasoned investors fans of this fintech company? Let’s have a closer look.
Encouraging Q4 Results
Despite the company missing revenue and earnings estimates, Nu’s numbers for Q4 represented significant growth. Revenues of $2.9 billion denoted yearly growth of 24.3% while earnings went up by an even sharper 41.3% to $0.11 per share. Earnings missed consensus estimates of $0.12 by just a whisker.
The rise in revenue and earnings can be attributed to the growth in customer count. Total customers at the end of the quarter stood at 114.2 million, up 22% from the previous year with active customers rising by 21.7% on a year-over-year basis to 94.9 million.
Both deposits and loans advanced also grew coming in at $28.9 billion and $20.7 billion compared to $23.7 billion and $18.2 billion in the prior year, respectively. Meanwhile, the company’s preferred metric to track non-performing assets, the 15-90 NPL ratio, dropped to 4.1% from 4.4% in the prior quarter.
Net interest income surged by 57% to $1.7 billion, however, a 70-basis-point drop in the net interest margin to 17.7% is a concern. Overall, the company closed the quarter by bolstering its cash balance to $9.2 billion at the end of 2024 from $5.9 billion at the start of the year.
Key Tailwinds
Nu’s impressive expansion in customer acquisition has solidified its position as the third-largest financial institution in Brazil by customer count. In Mexico, the company has successfully surpassed its 10 million customer target, reinforcing its foothold in a region benefiting from favorable demographic trends and an accelerating shift toward digital financial services. With an asset-light banking and financial services model, Nu is well-positioned to scale its user base, increase market penetration, and drive profitability at an accelerated pace.
Currently, over half of Brazil’s adult population holds an account with Nu, with a substantial number relying on it as their primary banking solution. While annual user growth rates may naturally decelerate over time, the company’s ability to consistently onboard new customers remains remarkable.
Mexico represents the next major frontier for Nu, where it has already built a strong presence. The company’s recent collaboration with Oxxo, a retail chain controlled by FEMSA, marks a significant development. Through this partnership, Nu will enable customers to make cash withdrawals at over 22,000 Oxxo locations across the country, further embedding itself into the financial ecosystem.
Beyond core financial services, Nu aims to leverage its extensive customer base to introduce solutions addressing common consumer pain points. These include offerings in mobile services, travel, and retail benefits. In 2024, Nu significantly expanded its reach by securing 11 agreements with public sector employers, municipalities, and major estates, effectively covering 70% of the total addressable market for payroll loans.
The company has also entered telecommunications with NuCell, its mobile phone service, initially available to select customers via a digital SIM card, with plans to introduce a physical SIM for broader accessibility. Given Nu’s existing 22% market share in prepaid mobile recharges, this expansion presents another avenue for disruption, particularly as its banking operations approach market saturation.
Looking ahead, as currency fluctuations in Brazil stabilize, Nu’s strategic initiatives place it in a strong position to further expand operations and strengthen its competitive advantage in the years to come.
Analyst Opinion on NU Stock
Overall, analysts remain hopeful about Nu, giving it a consensus rating of “Moderate Buy” with a mean target price of $15.60, which denotes upside potential of about 40% from current levels. Out of 14 analysts covering the stock, seven have a “Strong Buy” rating, five have a “Hold” rating, and two have a “Strong Sell” rating.
