Bill 'Latency Lord' Brennan
Fundamental Growth Investor, B2B/Sector Leaders & Picks-and-Shovels
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
Account-access failures at Nu could undermine its US expansion. After a week as a customer, the app showed only a new-account flow while abroad; selecting United States still did not reveal a way back into the account. Nu can no longer be recommended as a buy after this experience. Investor relations had not responded, and the investment is no longer worth holding. ^1 ^2 ^3 ^4 ^5
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
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
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
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'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
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 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
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 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
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
