Nu Holdings Powers Ahead As Strong Customer Spend, Margin Gains Drive Outlook

Nu Holdings (NU) reported Q2 earnings per share of $0.13, meeting estimates, though revenue of $3.66 billion missed expectations. Despite the revenue miss, the company demonstrated robust operational growth, with its customer base expanding 17% year-over-year to 122.7 million and Monthly Average Revenue per Active Customer increasing 18% to $12.2. NU shares surged over 10% on the news, as Goldman Sachs reiterated a Buy rating and raised its price target to $20, citing strong loan growth, stable asset quality, and anticipated net interest margin (NIM) expansion in Mexico and Colombia driven by stable funding costs and product enhancements.

Analysis

Nu Holdings (NU) reported mixed second-quarter results, with earnings per share of $0.13 meeting analyst estimates but revenue of $3.66 billion falling short of expectations. Despite the top-line miss, the market reacted positively, sending the stock up over 10%, focusing instead on strong underlying operational momentum. Key growth metrics were robust, with the customer base expanding 17% year-over-year to 122.7 million and Monthly Average Revenue per Active Customer (ARPAC) increasing 18% to a record $12.2. This performance prompted a bullish reiteration from Goldman Sachs, which raised its price target from $19 to $20. The analyst's confidence is predicated on strong loan growth, stable asset quality, and anticipated expansion of net interest margins (NIM). Specifically, management expects stable NIMs in its core Brazil market, with significant upside potential in Mexico and Colombia driven by lower funding costs and strategic partnerships, the effects of which are anticipated to become visible in the third quarter of 2025. While Goldman Sachs's net income forecasts for 2025 and 2026 remain largely unchanged at $2.8 billion and $4.5 billion respectively, the long-term outlook is slightly improved with a 1% increase in the 2027 forecast to $6.1 billion, signaling confidence in the company's sustained profitability trajectory.

Key Decisions for Investors

• Investors should prioritize the company's strong operational metrics, such as the 17% customer growth and 18% ARPAC increase, over the headline revenue miss, as these are the primary drivers behind the positive market sentiment and analyst upgrades.
• The primary forward-looking catalyst is the expected Net Interest Margin (NIM) expansion in Mexico and Colombia, so investors should monitor execution in these markets and look for confirmation of improved profitability in Q3 2025 results.
• Given the stock's significant price increase to $13.22, consider the current valuation relative to Goldman Sachs's $20 price target and the fact that 2025 net income forecasts are held steady due to offsetting costs, suggesting the growth story is more of a medium-term thesis.