INTR - Nu Holdings: Strong Growth Fully Priced

2024-04-25 14:19:01 ET

Summary

• In 10 years, Nu reached 94 million customers through a lean business model, and by focusing on user experience, the bank is beginning to threaten the big banks.
• Despite the strong growth in the number of customers, the company does not have tight margins, on the contrary, Nu has the highest margins among its peers.
• However, the valuation is extremely stretched with a P/B of 8x. And despite having excellent management, I believe that Nu will face major challenges to continue growing.

Investment Thesis

I recommend holding shares of Nu ( NU ). Nu achieved an incredible feat, the bank was able to scale operations in the middle and low income segments in Brazil, characterized by high default rates, and still be profitable in its operations. The digital bank created just 10 years ago is already a real threat to large banks and could reach 100 million customers by 2024....

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