Andres Cardenal
CFA, Economist & Financial Analyst, Investment Columnist
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.comÂ
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.comÂ
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.comÂ
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.comÂ
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.comÂ
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.comÂ
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.comÂ
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.comÂ
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.comÂ
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.comÂ
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.comÂ
