<body><div><ul><li>The bulls are dazzled by its rapid growth and low valuations.</li><li>The bears are worried about the macro and competitive challenges.</li></ul><p><b>Is this hot Latin American banking stock still a great investment?</b></p><p><b>Nu Holdings</b> <b>(</b><b>NU</b> <b>3.61%</b><b>)</b> has taken its investors on a wild ride since its public debut in December 2021. The Latin American digital bank went public at $9 a share, sank below $4 in 2022, and soared back to about $15 as of this writing. Let's see if it's the right time to buy, sell, or hold this volatile fintech stock.</p><h2>It's one of the world's fastest-growing banks</h2><p>Nu only provides online banking services, which enables it to scale up its business at a much faster rate than its brick-and-mortar competitors. It's based in Brazil, and it also provides its banking services in Mexico and Colombia.</p><figure><img src="https://img.particlenews.com/image.php?type=thumbnail_580x000&amp;url=0Gwyfg_0wP8ABZk00" alt="https://img.particlenews.com/image.php?url=0Gwyfg_0wP8ABZk00" width="2000" height="1125" ><figcaption>Image source: Getty Images.</figcaption></figure><p>More than 70% of Latin America's population is still unbanked, according to the World Bank and Latin America Reports. But the World Bank also estimates that Latin America's internet penetration rate jumped from 46% in 2013 to 81% in 2023. That makes Latin America one of the world's most fertile regions for digital banking services.</p><p>Nu established an early mover's advantage in that market, and it more than tripled its customers from 33.3 million at the end of 2021 to 104.5 million by the end of the second quarter of 2024. During that period, Nu's activity rate (its active customers divided by total customers) grew as it rolled out more services. Its monthly average revenue per active customer (ARPAC) more than doubled, and the costs for serving those customers rose at a much slower rate. Its adjusted net profit turned positive in 2021 and soared at a compound annual growth rate (CAGR) of 1,246% over the following two years.</p><h2>The reasons to buy and hold Nu's stock</h2><p>Nu's business is maturing, but it could still have plenty of upside potential as it gains more customers and expands into more countries. Its credit cards and crypto trading tools should further increase the stickiness of its ecosystem.</p><p>For 2024, analysts expect Nu's revenue and adjusted earnings per share (EPS) to increase 40% and 68%, respectively. For 2025, they expect its revenue and adjusted EPS to rise 28% and 48%, respectively. Those are stunning growth rates for a stock that trades at just 25 times forward earnings. That's probably why Warren Buffett's <b>Berkshire Hathaway</b> (NYSE: BRK.A) (NYSE: BRK.B) invested in its IPO and still holds a $1.6 billion stake in the company.</p><p>Nu has also been beefing up its digital ecosystem with new artificial intelligence (AI) features. It already uses AI tools to analyze customer data, run financial assistance chatbots and planners, and strengthen its cybersecurity defenses. It even recently acquired the Silicon Valley-based data intelligence company Hyperplane to accelerate that expansion. Those upgrades could lock in its customers and widen its moat against its regional competitors.</p><h2>The reasons to sell or avoid Nu's stock</h2><p>Nu's future looks bright, but its valuations could remain compressed by the currency devaluation issues and inflationary headwinds in Latin America. The Brazilian Real has already shed nearly 30% of its value against the U.S. dollar over the past five years, and that pressure could continue to throttle its reported growth in U.S. dollars.</p><p>The World Bank only expects Latin America's gross domestic product (GDP) to grow 1.9% this year as it grapples with unemployment, inflation, crime, and aging populations. Those macro challenges could cause many investors to broadly shun Latin American stocks.</p><p>Nu also faces a lot of competition from <b>MercadoLibre</b> <b>(</b><b>MELI</b> <b>0.43%</b><b>)</b>, the Latin American e-commerce leader, which owns the Mercado Pago digital payments platform. MercadoLibre has been expanding Mercado Pago's ecosystem with more credit card and crypto trading services, and it's trying to consolidate its digital wallet and fintech services into a unified digital banking platform in Mexico. If MercadoLibre launches its own digital bank, it could become a major threat to Nu.</p><h2>Is it the right time to buy, sell, or hold Nu's stock?</h2><p>Nu faces near-term macro and competitive headwinds, but its core business is still firing on all cylinders. If you believe this hot fintech company can maintain its early mover's advantage, expand into more countries, and continue to lock in unbanked customers while pulling people away from traditional banks, then it's still a great time to buy and hold its stock.</p></div></body>

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Nu Holdings Stock: Buy, Sell, or Hold?

The bulls are dazzled by its rapid growth and low valuations. The bears are worried about the macro and competitive challenges. Is this hot Latin American banking stock still a great investment?. Nu Holdings (NU 3.61%) has taken its investors on a wild ride since its public debut in December...