Crossroads
Retail Investor, YouTube Investing Creator
Nu's outlook improves now that Nubank is not pursuing Monzo via acquisition, easing concern about spreading too thin. The worry was that a deal would come just as Nu ramps in Mexico and Colombia and launches in the United States; add a Super El Nino and it would not have been a disaster, but the market's upset was understandable. x.com x.com
Nu Holdings' $13 billion acquisition of the UK's Monzo raises no long-term concern, though the timing could be better. The market dislikes it on dilution and doing too much too soon. Mexico has only just turned profitable, while a Super El Nino could hit Brazil, the US launch starts unprofitable and Colombia is likely still unprofitable; next year might have been better, though the opportunity may not have waited. x.com x.com
Nu is going global with best-in-class management, and buying Monzo could be a big growth opportunity. Per @PaulBonnet, Nubank is rumored to buy Monzo for about $13B. Monzo's loans are only 9-10% of deposits versus 85-90% at Nu, and its net margin is half Nu's, so Nu could likely grow Monzo's EPS at least 50% faster than its core. Nu trades under 4x revenue and would pay just under 6x for Monzo. The deal would be dilutive, likely 30% cash and 70% stock, but expands Nu's market. x.com x.com x.com … Show more
Nu Holdings' US entry targets people from Latin America now living there, rather than direct competition with SoFi or Robinhood; entering the US matters much more than Brazil's election. After Lula's reelection, Nu opened down 21% and was testing its yearly lows. This dip is likely a great long-term buy. x.com x.com x.com
Nu's prolonged app-access failure makes its claim to be a strong tech bank doubtful and could deter other Americans from using it. Five days after being locked out abroad, selecting the US still has not restored access; Nu's support suggested that same step. After this banking experience, investing in Nu no longer makes sense. x.com x.com x.com
Nubank is a good entry again because enough uncertainty is priced in to justify the remaining downside risk. Underwriting and risk-adjusted returns have never been better and keep surprising to the upside, and the loan book is very short-dated. Payroll and secured loans are its next growth wave in Brazil, where it adds 12 million users a year while ARPAC rises. With 40–50%+ ROE and close to 50% revenue growth, it is not out of growth. x.com x.com x.com x.com
Today's fundamentals and long growth runways make Nu Holdings and MercadoLibre among the market's most compelling and mispriced opportunities for patient capital. Their short-term outlook shifts mostly with FX volatility and fiscal and monetary policy uncertainty. 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 and MercadoLibre's biggest secular-growth advantage is resilience to electoral and macro shocks. Nu hit 139 million customers and $1 billion quarterly net income through Brazil's recession, impeachment and pandemic. MercadoLibre survived the dot-com crash and devaluations; Mercado Pago has nearly 78 million monthly users and credit growth above 90% year on year. With regional e-commerce growing 15%-20% annually, their value through 2027 depends on adoption and delinquencies, not one election. … Show more
Latin American equities' sell-off looks overdone as long as the underlying businesses keep growing and fundamentals remain intact. Under that condition, the drop is market noise, and MercadoLibre and Nu Holdings could offer attractive opportunities amid the panic. 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
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
