Fede Sandler
Former IRO at Mercado Libre/Nubank, Forbes Columnist
Nu's unified customer view can remove the US bank silos that make even preferred clients struggle to obtain credit cards. Cris Junqueira described months of waiting for a card because her bank could not verify her address despite holding her mortgage. A similar experience at a US bank suggests the friction is not isolated. x.com x.com x.com
Nu's 5x multiple is justified by its cost to serve, not by endless 40% growth. With no branches, serving a customer costs about USD 1 a month, giving it a 19.5% efficiency ratio versus about 37% for the banks it is compared with, and a 33% ROE versus Itaú's roughly 22%. Even with single-digit growth, that ROE supports far more than a typical bank's book value. At 5x the stock can trade sideways if growth disappoints; the thesis breaks only if the cost to serve stops being USD 1. x.com x.com
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
SoFi and Nu are deeply undervalued because legacy banks cannot undercut neobanks' pricing power. Incumbents carry huge headcounts, thousands of branches, hundreds of tech vendors and no way to consolidate their data onto one platform. Neobanks run with no branches, a few thousand employees and their own tech stacks. Even heavy digital investment would take legacy banks at least half a decade, by which time SoFi and Nu could be the top two US banks by customer count. 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
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
These picks ride AI demand and digital scale. Reddit licenses conversation data to AI firms; Upstart supplies AI lending; Nu leads Latin American banking; Uber's autonomous-vehicle play is overlooked. Talen sells AI data-center power at premium rates; Dell ships AI servers; Microsoft pairs Azure with OpenAI. CrowdStrike secures enterprises; Duolingo expands its most-downloaded language app into math and music; Mastercard, one of two global card networks, takes a cut of trillions in payments. … Show more
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 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
Capital One's stronger credit and improved net-interest and non-interest revenue make its 9x earnings and 1.1x book valuation appealing for a quality card business with a global payments network. Operating expenses were in line. 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
SoFi is attractive at these prices, but Nu Holdings is preferred because it is much cheaper with very similar growth. SoFi pays about 50x more to acquire a US customer than Nu pays in Brazil, Mexico and Colombia; SoFi's higher ARPU and lifetime value are what justify that cost. How Nu's metrics hold up as it expands into the US is the open question. x.com x.com
