Should You Buy Nu Holdings While It's Below $14?

Company Overview - Nu Holdings is a digital bank that has disrupted the traditional banking sector in Brazil by offering innovative, low-cost banking solutions [1] - The company operates a digital-only neobank model without physical branches, significantly reducing overhead costs [3] - Nu Holdings has grown its customer base from 24 million in 2020 to nearly 99 million today, representing over 56% of Brazil's adult population [4] - The number of unbanked Brazilians has decreased from 16.3 million to 4.6 million, or about 3% of the adult population [4] Market Expansion - Nu Holdings is expanding into key Latin American markets, including Mexico and Colombia [2][5] - In Q3, the company's customer base grew to 2 million in Colombia (150% YoY growth) and 8.9 million in Mexico (106% YoY growth) [6] - 51% of Mexico's population remains unbanked, representing a significant growth opportunity for Nu Holdings [6] Financial Performance - Nu Holdings has achieved seven consecutive quarters of net income growth [7] - In Q3, the company reported $553 million in profit, an 82$15.2 billion, only slightly higher than the $14.5 billion reported at the end of 2023 [10] Credit Concerns - 90+ day delinquent non-performing loans increased to 7.2$1.6 billion in write-offs, a significant increase from $957.6 million in the previous year [9] - Berkshire Hathaway reduced its position in Nu Holdings by 19%, now holding 86.4 million shares [10] Strategic Initiatives - Nu Holdings is exploring new verticals to increase its total addressable market, including NuPay, NuTravel, NuMarketplace, and NuCel (mobile phone service) [11] - The company aims to create a digital ecosystem that promotes cross-selling opportunities and reduces reliance on credit for sustained growth [12] Valuation and Growth Potential - Nu Holdings' stock has declined 29% from its 52-week high [2] - The stock is currently trading at approximately 31 times earnings and 7 times sales, down from 48 times earnings and over 10 times sales before the recent sell-off [8] - The company's rapid growth and higher valuation make it vulnerable to volatility, but it remains a solid growth stock for long-term investors [14]