What Should You Buy: Understanding Nu Holdings' Investment Case Ahead of Q4 Earnings

The Growth Story Behind Latin America’s Digital Banking Leader

Nu Holdings (NYSE: NU) has captured investor attention with its stock climbing over 50% in the past 12 months, establishing itself as one of the fastest-growing fintech companies operating across Latin America. The company’s core business model—leveraging NuBank as the region’s largest digital-only direct bank—demonstrates how innovation in banking services can challenge traditional financial institutions.

Operating primarily across Brazil, Mexico, and Colombia, Nu reimagined banking by eliminating physical branches and fees. This approach enabled customer acquisition at unprecedented speed. Since 2021, the company nearly doubled its customer base from 53.9 million to 127.0 million by Q3 2025. More impressively, it maintained service cost stability at approximately $0.90 per active customer monthly, while simultaneously expanding its revenue per customer from $4.50 to $13.40.

Analyzing the Path to Profitability and Margin Pressures

Revenue generation has accelerated dramatically—growing at an 89% compound annual rate from 2021 through 2024. The company achieved GAAP profitability in 2023 and nearly doubled earnings per share throughout 2024. However, this expansion came amid significant macroeconomic challenges in its key markets, including political volatility and currency fluctuations.

The recent operational performance reveals important trade-offs. While customer growth decelerated from 23% year-over-year in Q3 2024 to 16% in Q3 2025, the company’s activity rate remained relatively stable around 83%. Monthly engagement metrics indicate that existing customers are utilizing more financial services, driving revenue growth even as acquisition rates slow.

What Should I Buy investors particularly notice: gross margins compressed from 46% in Q3 2024 to 43.5% by Q3 2025. This pressure stemmed from aggressive expansion into Mexico and Colombia, which require higher funding costs and credit risk provisions than the more mature Brazilian market. Additionally, Nu’s expansion into secured lending and payroll-backed loans—more capital-intensive offerings—further pressured profitability metrics.

Net income growth reflected these margin challenges, decelerating from 63% year-over-year growth in Q3 2024 to 41% by Q3 2025, despite top-line revenue continuing to expand at roughly 42% on a currency-neutral basis.

What’s Next: Catalysts Shaping Future Growth

Looking ahead, Wall Street consensus projects 36% revenue expansion and 46% earnings growth for the full year, with expectations of 30% and 37% compound annual growth rates respectively for 2025-2027 as the company gains members and cross-sells additional financial capabilities.

Several strategic developments should support this trajectory. Nu recently secured a banking license in Mexico and filed for full banking authority in Brazil. These regulatory approvals will enable compliance with new fintech regulations, enhance credibility, and unlock new service offerings. The company’s U.S. bank charter application signals ambitions to expand beyond its current Latin American footprint.

Amazon’s integration of NuBank’s payment technology on its Brazilian platform provides another competitive advantage against comparable payment processors. These infrastructure investments position Nu to defend market share against both traditional banks and emerging fintech competitors like MercadoLibre.

Valuation and the February Earnings Inflection Point

At $17 per share, Nu trades at approximately 20 times forward earnings estimates. Market valuations currently reflect concerns about Latin American macroeconomic conditions, which may be creating entry opportunities for growth-focused investors. Should near-term regional headwinds ease, the stock could attract significantly increased attention.

The upcoming February earnings report will be pivotal for determining whether the company can sustain growth while stabilizing margins. If Nu meets or exceeds analyst expectations on customer acquisition, cross-selling success, and margin trends, it would support the bull case ahead.

For investors evaluating what should I buy in the fintech and regional banking space, Nu’s combination of proven business model, expanding addressable market, and ongoing operational leverage presents a compelling profile before the next earnings announcement.