Oliver | MMMT Wealth
Founder of MMMT Wealth, CPA, Technical/Fundamental Analysis
Nu Holdings' consistent EPS growth during Lula's presidency supports its three-to-five-year business outlook despite the election result. At $12.20 it trades at roughly 10.2x forecast FY27 EPS against 27% expected EPS growth, or about 0.37x PEG. A different result likely would have changed the immediate market reaction, but not where the business is headed. x.com
Nu Holdings can reach $40 in three years, up 167%, on 32.6% EPS growth. Net income of about $5.6B in FY27 and $7.1B in FY28, slightly above analyst estimates, implies EPS of $1.17 and $1.47. At 0.8x PEG, a 26x multiple, that gives roughly $40 in the base case; 1x PEG gives $48, feasible given its strong unit economics and lower LatAm risk. It trades near 0.4x PEG while expanding into the US, with a possible Brazilian bull market ahead. x.com x.com
Nu Holdings' growth under Lula makes today's selloff look absurd. On a TTM basis since Q1 2023, revenue rose 270% and net income went from a $180 million loss to $3.61 billion, or $0.74 EPS; having done so well during his term, it should be fine going forward. x.com x.com x.com
Nu Holdings' superior business model will win over the long term regardless of politics. Under Lula, its Q2 2026 presentation shows customers rising to 139 million, revenue per customer to $17, the efficiency ratio falling to 20%, and quarterly net income reaching $1.06 billion; Lula has since been reelected. x.com
Nu Holdings' upcoming earnings look unlikely to be well received if the market does not reward Inter & Co's results, since the two have historically traded similarly around earnings. Both operate in the same credit cycle, but Nu has a much lower share of secured lending, putting it at a credit-risk disadvantage, though it is more diversified across countries. x.com
Nu Holdings' sustained growth makes election-driven pessimism look overdone. Quarterly revenue before credit-loss provisions grew at a 45.1% annualized rate from Q1 2023 to Q2 2026 under Lula. This Brazilian shock looks like the tariff scare, when markets quickly shrugged off initial pessimism. FedexSTi notes that Nu reached 139 million customers and $1 billion in quarterly net income after enduring Brazil's 2014-16 recession, Dilma's impeachment and the pandemic. x.com x.com x.com
MercadoLibre and Nu Holdings have massive runways and have thrived across political backdrops, so they do not need tax cuts or deregulation to keep winning. Both have performed extremely well in Brazil under Lula since 2023, even in a fragile macro backdrop. The election-driven selloff left these cream-of-the-crop businesses at lower multiples, and more near-term selloffs are possible. x.com x.com x.com x.com
Nu's 33% ROE is not proven until it survives a full credit cycle, because a bank's underwriting is only tested when borrowers stop paying. Per @sytaylor, Q2 revenue rose 39% to $5.9bn and net income topped $1bn. The open question is what happens to that ROE when unemployment rises, payments are missed, credit losses climb and money gets more expensive. Brazil's slowing economy and rising NPLs are not the same as a full cycle; until then the reported ROE is somewhat fake. x.com x.com x.com
Excellent management makes dLocal, MercadoLibre and Nu Holdings three great companies to pick up at a discount after the Lula-election selloff. Their Brazil exposure sent them down 9%, 9% and 22% on claims that the investment climate had worsened, a claim worth questioning. x.com
MercadoLibre's growth under Lula makes today's selloff look absurd. On a TTM basis since Q1 2023, revenue is up 206% and EPS 200%; having done so well during his term, it should be fine going forward. x.com x.com
MercadoLibre already covers Latin American consumer-finance exposure, so there's no need to own Nu, which is even harder to truly understand. Nu is all finance under foreign laws and culture, very difficult for a US investor to grasp, and MercadoLibre's business segments are hard enough. Given the disadvantage in analyzing international stocks, it is better to own only what can be truly understood. x.com
Political fear after Lula election wins is a buying opportunity in Brazilian stocks, including EWZ, MercadoLibre and Nu Holdings. In USD, the table shows 12-month gains of 115% after 2002, 76% after 2006 and 18.5% after 2022, though shorter-term returns varied. x.com
