Why Nu Stock Gained 21% in August

Core Insights - Nu Holdings reported strong second-quarter results with a 21% increase in shares during August, indicating robust growth opportunities [1] - The digital bank is expanding its customer base to include more affluent clients while maintaining its mass-market focus [3] Customer Growth - Nu added 4.1 million new customers in Q2, reaching a total of 122.7 million, an 18% year-over-year increase [3] - As of the end of Q2, Nu had 107 million customers in Brazil (60% of the adult population), over 12 million in Mexico (13% of the adult population), and served 10% of the adult population in Colombia [4] Financial Performance - Deposits increased by 41% year-over-year, and net interest income rose by 33% to $2.1 billion [4] - Loan originations grew by 43%, and the credit portfolio increased by 40% [4] - Average revenue per active customer increased by 18% to $12.20, while the cost to serve per active customer dropped to $0.80, leading to a 42% increase in net income to $637 million [5] Growth Opportunities - Nu has significant growth potential both domestically and internationally, with strategies focused on cross-selling services and deepening customer engagement [6] - The bank's presence in Mexico and Colombia remains relatively small, providing ample opportunities for expansion [6] Market Expansion - There are rumors of Nu looking to acquire Argentina-based neobank Brubank, which would allow entry into a new market and complement its existing services [7] - Management has indicated plans to explore opportunities beyond current markets, with investments in other global banks [8] Valuation - Nu stock is currently trading at 17 times forward, 1-year earnings, presenting a favorable entry point for potential investors [8]