Nu Holdings Ltd. (NU): A Bull Case Theory

Core Thesis - Nu Holdings Ltd. (NU) presents a compelling long-term growth opportunity driven by its under-monetized user base and substantial ARPAC upside [2][4] User Base and ARPAC - The bank currently serves 122.7 million users with a weighted-average ARPAC of $12.2, while mature cohorts generate $27–$28 per month, compared to incumbents at approximately $45 [2] - Management anticipates ARPAC to rise steadily toward incumbent levels while maintaining a low $1 cost to serve, creating significant operating leverage as cohorts mature [2] Revenue Projections - Under a conservative scenario, assuming flat user growth for the next five years and ARPAC rising to only $20, Nubank's revenue could reach $29.45 billion, translating to $5.89 billion in net income [2][3] - Modest assumptions of 5% user CAGR could lift revenue to $37.6 billion and net income to $7.5 billion, implying a market cap of $150 billion and approximately 17.5% annualized return [3] Market Capitalization and Upside Potential - Applying simple P/E multiples suggests a year-five market cap between $88 billion and $147 billion, indicating 31%–119% upside from the current valuation of $67.2 billion [3] - This analysis does not account for potential upside from user expansion, cross-sell opportunities, margin improvement, or international growth [3] Risk Factors - Risks include higher credit costs from macroeconomic shocks, ARPAC compression from mass-market pricing pressure, FX translation exposure, and execution challenges in scaling credit and payroll products [3] Investment Case - Nubank's combination of under-penetrated users, strong ARPAC growth potential, and low operating costs positions the stock for meaningful upside, making it a highly attractive investment case over the medium term [4] - The stock has appreciated approximately 20% since a previous bullish thesis in May 2025, which highlighted strong revenue and customer growth, high net income margins, and upside from underpenetrated financial services in Latin America [5]