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Price: $11.97
Discount category: Below intrinsic value
Next earnings: 2026-11-12
Next earnings is estimate: Yes
Company name: Nu Holdings
Sector: Digital banking
About: Nu Holdings runs Nubank, a digital bank in Brazil, Mexico and Colombia. It has no branches and serves customers through its app. It offers credit cards, personal and secured loans, deposit accounts, payments, investments and insurance. At June 30, 2026, it had 138.9 million customers: almost 118 million in Brazil, 15.8 million in Mexico and more than 5 million in Colombia. In Q2 2026, revenue was $5.9 billion and net income was $1.1 billion. In September 2026 it launched products in the United States through a partner bank, and it has conditional approval for a US national bank. The company is incorporated in the Cayman Islands, its Class A shares trade on the NYSE, and it reports in US dollars.
Thesis: The market prices Nu Holdings for Brazil risk, for credit risk in a fast-growing unsecured loan book and for the cost of its expansion outside Brazil. Most of its customers and profit are in Brazil, and Brazilian stocks and the real fell sharply on October 26, 2026, after the presidential runoff, according to press reports. Nu reports in US dollars, so a weaker real lowers its reported profit. The credit portfolio grew 37% in a year to $39.4 billion, and Nu said that it expands into higher-risk segments on purpose. Loans more than 90 days overdue were 6.9% in Q2 2026. Nu also spends on Mexico, Colombia and the United States. For the gap to close, three things must be true. Net income must keep growing, after a record of $1.1 billion in Q2 2026, with a return on equity near 30%. The 15 to 90 day delinquency ratio must stay near its normal seasonal range, after 4.8% in Q2 2026. Mexico and the new markets must move toward profit without large losses. The Q3 2026 report, expected on about November 12, 2026, and the first Investor Day on December 8, 2026, give the next tests. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is a credit cycle or a currency crisis in Brazil.
Risks: Brazil risk. Most of Nu's customers and profit are in Brazil. After the October 25, 2026 presidential runoff, Brazilian stocks and the real fell sharply, according to press reports. A weaker real lowers profit in US dollars, and higher interest rates can raise delinquency. Credit risk. Most of the $39.4 billion credit portfolio is unsecured credit cards and loans. Nu expands into higher-risk segments on purpose. The 90-day delinquency ratio was 6.9% in Q2 2026. A credit cycle can raise provisions quickly. Expansion cost. Nu invests in Mexico, Colombia and the United States. The efficiency ratio rose to 19.5% in Q2 2026 from 17.6% in Q1 2026, partly because of international expansion. New markets can lose money for years. Management changes. The CFO changed in July 2026 and the CTO leaves on November 12, 2026. More changes can slow execution. Regulation. Brazilian rules on the use of the word bank, on interest rates and on payments can change Nu's products and costs.
Balance sheet: Nu funds its loans mainly with customer deposits and its own equity. At June 30, 2026, total deposits were $45.3 billion: $36.4 billion in Brazil, $5.7 billion in Mexico and $3.3 billion in Colombia. The credit portfolio was $39.4 billion, of which $26 billion was credit cards, $10.3 billion unsecured loans and $3.1 billion secured loans. Cash and cash equivalents were about $13.6 billion, and total assets were $82.8 billion. Total equity was $13.3 billion, and the return on equity was 33% in Q2 2026. In Mexico, loans were only 35% of deposits. The cost of deposits was 88% of interbank rates. Nu bought back 40.7 million shares for $500.4 million by June 30, 2026, under its $1.0 billion program. As of 2026-06-30.
Checkpoints: Nov 12, 2026 (estimate): Q3 2026 results: profit and credit quality. Pending. Watch: Net income above the $1.1 billion of Q2 2026 and a stable 15 to 90 day delinquency ratio pass; a fall in net income or a sharp rise in delinquency fail. Dec 8, 2026: First Investor Day: long-term targets. Pending. Watch: Clear long-term targets for growth, returns and the path to profit in Mexico and the United States pass; vague targets or a much higher spending plan fail.
Recent events: 2026-10-23: Nu announced that Chief Technology Officer Eric Young will resign to take a new opportunity. He stays until November 12, 2026. Founder and CEO David Vélez will oversee Global Platforms on an interim basis. 2026-09-30: Nu said that it is not pursuing a transaction with Monzo, after media reports about a possible deal. It said that its capital allocation framework is unchanged. 2026-09-10: Nu launched its products in the United States through FDIC-insured partner Lead Bank, with a deposit account, money transfers and a credit card. It also launched Nu Global, a multi-currency account. The US products use a partner bank while Nu waits for its national bank charter. 2026-09-02: Nu announced its first Investor Day, on December 8, 2026, in New York City. 2026-08-13: Nu reported Q2 2026 results. Customers reached 138.9 million. Revenue rose 39% to $5.9 billion on an FX-neutral basis. Net income rose 49% to a record $1.1 billion, and the return on equity was 33%. The credit portfolio grew 37% to $39.4 billion, and deposits grew 18% to $45.3 billion. The 15 to 90 day delinquency ratio improved to 4.8%, and the 90-day ratio rose to 6.9%. 2026-07-20: Nu agreed to buy Banco Porto Real to add a banking license in Brazil, as new rules on the use of the word bank require. 2026-07-10: Nubank México received the authorization of the CNBV to start operations as a bank. 2026-06-04: Nu announced a share buyback program of up to $1.0 billion over 12 months, to June 3, 2027. By June 30, 2026, it had bought 40.7 million shares for $500.4 million. 2026-06-01: Nu appointed Rob Livingston, CFO for North America at Visa, as Chief Financial Officer from July 13, 2026. He replaced Guilherme Lago. 2026-05-14: Nu reported Q1 2026 results. Net income rose 41% to $871 million, and the return on equity was 29%. The 15 to 90 day delinquency ratio rose to 5.0%, in line with its normal first-quarter pattern.