Should You Buy Nu While It's Below $12?

Core Viewpoint - Nu Holdings is a rapidly growing fintech company in Latin America with a market cap of $55 billion, currently trading at a valuation that presents a potential investment opportunity as shares are 31% off their peak [2][12]. Group 1: Business Performance - Nu's revenue increased by 43% in 2024, maintaining a strong growth trajectory, with Wall Street analysts projecting a compound annual growth rate of 32% over the next three years [3]. - The company's digital banking platform has gained significant traction in Brazil, Mexico, and Colombia, with a customer base that grew to 114 million, more than double from three years ago [4]. - The net profit margin improved from negative 9.7% in 2021 to 17% in 2024, showcasing the scalability of its business model due to lower overhead costs compared to traditional banks [5]. Group 2: Market Position and Risks - Nu operates in three of the four largest economies in Latin America, with 58% of adults in Brazil as customers, indicating a strong market presence but also suggesting that future growth may slow as it saturates its core markets [8]. - The company faces specific risks associated with its Latin American base, including potential interest rate changes, inflation, and geopolitical issues [9]. - The executive team's risk management is crucial, especially as the credit loss allowance expense increased by 39% in 2024, which could impact future growth if lending standards are loosened [7]. Group 3: Investment Considerations - Despite recent volatility and a decline from its all-time high, the positive aspects of Nu's business model and growth potential may outweigh the risks, making it an attractive investment below $12, especially with a forward P/E ratio of 19.4, comparable to the S&P 500 [11][12].