Is Nu Holdings Stock a Buy Now?

Nu Holdings (NYSE: NU), Latin America's largest digital bank, has seen its stock decline 37% from its 52-week high despite reporting robust 2024 financial results, including $11.5 billion in revenue (up 43.4%) and $0.46 adjusted EPS (up 84.5%). The market's concern appears to stem from a projected growth deceleration to 29% in 2025 and potential margin pressure from ongoing customer acquisition costs. However, the company maintains a strong fundamental position with 114 million customers and significant product adoption, now trading at a more compelling 18x 2025 EPS estimate compared to 50x last year, with future global expansion plans potentially serving as a catalyst.

Analysis

Nu Holdings (NYSE: NU), Latin America's largest digital bank, has experienced a 37% decline from its 52-week high, despite reporting robust 2024 financial results. The company achieved $11.5 billion in revenue, a 43.4% year-over-year increase, and adjusted EPS of $0.46, up 84.5% from 2023, driven by 114 million customers and strong product adoption, including a 45% increase in its lending portfolio.

The market's pullback appears to be driven by concerns over growth deceleration and potential margin pressure. Revenue growth moderated to 43% in 2024 from 68% in 2023, with analysts projecting a further slowdown to 29% in 2025. Similarly, adjusted EPS growth is expected to decelerate significantly to 22% in 2025 from 84.5% in 2024, partly due to ongoing customer acquisition costs.

Despite these concerns, Nu Holdings maintains a strong fundamental position, benefiting from its unique emerging market exposure which insulates it from certain US economic jitters. The recent stock sell-off has led to a more compelling valuation, with the stock now trading at 18 times consensus 2025 EPS, a substantial reduction from 50 times last year. Future global expansion plans, with a formal announcement anticipated later this year, represent a significant potential catalyst for renewed growth.

Key Decisions for Investors

• Evaluate the current 18x 2025 EPS valuation as a potential entry point following the recent stock decline
• Closely monitor the upcoming formal announcement and execution of Nu Holdings' global expansion plans for future growth catalysts
• Consider dollar-cost averaging to mitigate short-term volatility while building a long-term position