Nu Holdings (NYSE: NU) is rapidly transforming digital banking in Latin America, with 114 million members and growing influence in Brazil, Mexico, and Colombia. Despite its impressive growth trajectory, recent investor moves, including Berkshire Hathaway’s partial exit, have created mixed market sentiment.
Explosive Growth in Latin America
Nu Holdings has become a dominant force in Brazil, capturing over half the country’s population on its platform. The digital-first bank reported a 20.4 million user increase year-over-year, ending 2024 with 101.8 million customers in Brazil alone.
Beyond Brazil, Nu’s expansion into Mexico and Colombia is accelerating, surpassing early growth rates seen in its home market. The company leverages a proven cross-selling strategy to increase customer engagement, further strengthening its financial position.
Strong Financials and Cost Efficiency
Nu Holdings reported a 50% year-over-year revenue surge in Q4 2024, driven by higher customer activity. Net income jumped from $360.9 million to $552.6 million, demonstrating the efficiency of its digital-first model.
A key advantage is Nu’s ability to operate with significantly lower costs than traditional banks. The cost to serve customers dropped from $0.90 to $0.80 per user in Q4, showcasing improved operational efficiency that enhances profitability.
Berkshire Hathaway Trims Stake, But Institutions Buy More
Warren Buffett’s Berkshire Hathaway sold 53% of its Nu shares in Q4 2024, reportedly due to currency concerns tied to the Brazilian Real. This move contributed to short-term negative investor sentiment, but it has not deterred institutional investors from increasing their stakes.
Notably, Oak Grove Capital LLC doubled its holdings, increasing its stake by 101%. Meanwhile, State Street Corp grew its position by 105.9%, and Baillie Gifford & Co. expanded its significant holding by 13%, signaling confidence in Nu’s long-term potential.
Analyst Ratings Reflect Mixed Sentiment
Nu Holdings currently holds a consensus “Hold” rating with a price target of $15.47, according to MarketBeat. Analyst opinions vary, with UBS Group lowering its target from $15.50 to $15.00, and JPMorgan Chase cutting its forecast from $15.00 to $14.00.
While Citigroup downgraded Nu from “neutral” to “sell” with a target of $11.00, Susquehanna raised its price target from $16.00 to $18.00, indicating differing perspectives on Nu’s valuation and future performance.
Stock Performance and Market Outlook
As of March 5, 2025, Nu Holdings’ stock traded at $10.46, down from its 52-week high of $16.15. The stock has experienced volatility but remains an attractive fintech play, with a market capitalization of approximately $50 billion and a price-to-earnings ratio of 26.14.
Nu’s proven success in Brazil, combined with its expansion into Mexico and Colombia, underscores its potential for long-term growth. While investor sentiment remains divided, the company’s ability to sustain user acquisition, increase revenue, and maintain low costs positions it as a leading digital banking disruptor in Latin America.
