Track market-moving stories before they get noisy

Key Takeaways Nu Holdings reached 135 million customers as quarterly revenues and net income hit records.Mexico posted its first profitable quarter as Nu expanded to 15 million customers in four years.NU's credit portfolio rose 40%, while delinquencies increased and risk-adjusted margins declined. Nu Holdings Ltd. (NU - Free Report) , the parent of Nubank, has built one of Latin America’s largest digital financial platforms. Its branchless model combines credit cards, deposits, loans, payments and investment products in one mobile application. The company ended the first quarter of 2026 with more than 135 million customers across Brazil, Mexico and Colombia, giving it greater consumer reach than many digital-banking rivals.

NU shares have risen about 6.3% over the past month, outperforming close fintech peers SoFi Technologies, Inc. (SOFI - Free Report) and StoneCo Ltd. (STNE - Free Report) over a comparable recent period. SoFi and StoneCo shares have gained 1.1% and roughly 3.8%, respectively. The comparison suggests that investors have responded positively to Nu’s earnings growth, improving efficiency and progress in Mexico, even as the wider fintech group has remained uneven.

However, a rising share price does not remove the risks. NU is expanding lending rapidly, investing in artificial intelligence and preparing for measured entry into the United States. Investors must balance these growth opportunities against higher provisions, credit exposure and a valuation that already assumes continued execution.

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Customer Growth Supports the Bull Case for NUNu Holdings’ scale remains its clearest advantage. The company passed 115 million customers in Brazil, 15 million in Mexico and approached 5 million in Colombia. Monthly activity remained strong at 83%, while monthly average revenue per active customer increased to around $16. These trends helped quarterly revenues reach approximately $5 billion for the first time in the first quarter of 2026.

Profitability also improved. First-quarter net income reached a record $871 million, up 41% year over year on an FX-neutral basis. NU’s reported efficiency ratio fell to 17.6%, showing that revenues continue to grow faster than operating expenses. Management expects the full-year ratio to move closer to 20% as delayed marketing, property and investment costs return during later quarters.

Mexico offers another major opportunity. Nu Holdings’ customer base has expanded from slightly more than 2 million to 15 million in four years. The operation also recorded its first quarter of IFRS profitability ahead of management’s internal plan. Mexico remains underbanked, and NU currently controls less than 1% of the profit pool it hopes to address.

AI and New Products of NU Could Lift EngagementManagement is using artificial intelligence to speed product development, improve credit decisions and lower servicing costs. Engineering output increased more than 50% year over year, while AI-based financial tools were already serving above 15 million monthly active users. Nu Holdings’ proprietary models are being used for credit-card decisions and unsecured lending, allowing the company to assess individual loan requests in under one second.

The company is also expanding into small-business banking. NU has approximately 5 million small-business customers in Brazil, many acquired by cross-selling services to existing personal-banking users. This base could support further growth in business cards, deposits, and secured and unsecured loans without large customer-acquisition spending.

Credit Expansion Creates Risk for NUNU’s credit portfolio climbed 40% to $37.2 billion, led by a 53% increase in unsecured lending. Total credit exposure, including available card limits, rose 44% to $70.7 billion. Because credit cards and unsecured loans made up 98% of new exposure, the company had to record larger expected-loss provisions.

Early-stage delinquencies increased to 5% from 4.11% at year-end, while risk-adjusted net interest margin declined to 9.5% from 10.5%. Management attributed most of the change to normal seasonality, portfolio growth and product mix rather than weakening borrowers. Still, investors should closely watch these measures because rapid unsecured lending can produce larger losses during an economic downturn.

NU’s Estimate RevisionsWhile earnings estimates for both 2026 and 2027 have been revised marginally downward over the past 60 days, the consensus mark has remained unchanged in recent times. However, these figures suggest year-over-year growth of 33.87% and 38.07%, respectively.

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Is NU Stock Fairly Valued?NU trades at approximately 13.48 times forward earnings. That is well below SoFi Technologies’ forward multiple of about 24.53 times but considerably above StoneCo’s 4.9 times. The discount to SoFi appears reasonable because SoFi operates in the competitive U.S. market and receives a higher growth premium. Nu Holdings’ premium over StoneCo reflects its larger customer platform, stronger earnings expansion and broader consumer-banking opportunity.

NU's Valuation

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NU is not an obvious bargain. StoneCo offers a much cheaper valuation, while SoFi Technologies provides exposure to U.S. lending and financial technology. Investors choosing Nu Holdings over StoneCo or SoFi are betting that its Latin American scale, Mexico expansion and credit models will continue producing above-average growth.

NU Stock Recommendation: HoldNu Holdings has a strong long-term story built around customer growth, low operating costs and a rising presence beyond Brazil. Mexico’s first profitable quarter, higher customer revenues and record net income show that the business can scale effectively. AI tools and small-business products may create additional growth, while NU’s valuation is more reasonable than SoFi Technologies’ multiple.

However, the stock’s recent 6.3% rise, growing unsecured-credit exposure and higher provisions call for patience, and NU must ensure that rapid lending growth will not weaken asset quality. It seems prudent for existing investors to retain their positions, but new buyers may wait for a better entry price.

At present, NU carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways Nu Mexico received banking approval and has 30 days to complete its transition to a bank.Nu's Mexico customer base grew in Q1 2026 to 15 million from 2.1 million in early 2022. NU plans to invest $4.2 billion in Mexico through 2030 while its market share remains below 1%. Nu Holdings Ltd. (NU - Free Report) , the company behind the Nubank brand, announced that its Mexican subsidiary, Nu Mexico, has received authorization from Mexico’s National Banking and Securities Commission (“CNBV”) to begin operating as a bank. The authorization process was supervised by the CNBV, the Bank of Mexico and the Ministry of Finance. Nu Mexico has 30 days to complete the transition.

The license will make Nu Mexico the country’s largest digital bank, serving more than 15 million customers. The company adds 12,000 customers daily, operates in 98% of Mexico’s municipalities and plans to invest $4.2 billion in the country through 2030.

Nubank entered Mexico in 2019, and Nu Mexico launched its first product in 2020: a no-fee credit card with customizable financing plans. It later added the Cuenta Nu savings account, featuring Cajita Turbo and Scam Alert, alongside personal loans and secured cards designed to widen credit access and help customers build credit histories.

That broader product range is supporting a financial turning point. Nu Mexico reached break-even in the first quarter of 2026 after expanding its customer base to 15 million from 2.1 million in early 2022. Monthly Average Revenue Per Active Customer rose to $15.90 from $11.60 in the prior year, while its efficiency ratio improved by 78 percentage points to 42%.

The opportunity remains large. NU estimates Mexico’s 2025 consumer banking gross-profit pool at $43 billion, with projected five-year annual growth of about 15%, while its market share remains below 1%. NU’s first-quarter 2026 managerial revenues reached $5.32 billion, deposits totaled $42.4 billion and its credit portfolio stood at $37.2 billion.

How Are SOFI & XYZ Faring?SoFi Technologies (SOFI - Free Report) is expanding beyond consumer lending by adding small-business loans, home-equity products, AI financial tools, enterprise banking and blockchain-based services. SOFI's partnerships are also bringing more funding onto its loan platform, reducing reliance on balance-sheet lending. Three agreements announced in March 2026 covered more than $3.6 billion in personal loans.

Block (XYZ - Free Report) is widening its reach through Cash App, Square, Afterpay and bitcoin products, linking consumer payments with merchant services and credit. Its tools include installment plans for peer-to-peer transfers, contactless payments and restaurant technology. Across Cash App Borrow, Afterpay and Square Loans, XYZ has provided customers with access to more than $200 billion.

NU’s Price Performance, Valuation, and EstimatesShares of NU have declined 10.3% in the past three months, underperforming the broader industry and the S&P 500 Index.

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From a valuation standpoint, NU trades at a forward price-to-earnings ratio of 13.73X, well above the industry’s 11.42X. It carries a Value Score of C.

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NU’s estimates have declined a cent over the past month. The Zacks Consensus Estimate for full-year 2026 EPS is pegged at 83 cents.

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NU stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Nu Holdings (NU +0.24%) is one of the world's fastest-growing fintech companies. It owns NuBank, the largest digital-only bank in Latin America. By streamlining its digital services and offering a fee-free credit card, it expanded much faster than its brick-and-mortar competitors. It also expanded its ecosystem with more loans, e-commerce services, and crypto trading tools.

From 2021 to 2025, Nu's year-end customer base grew from 54 million to 131 million, its activity rate (active customers divided by total customers) expanded from 76% to 83%, and its monthly average revenue per customer (ARPAC) more than tripled from $4.50 to $15. Even as it added customers at that blistering pace, its average cost per active customer held steady.

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In the first quarter of 2026, Nu's total customers rose to 135 million, its activity rate held steady at 83%, and its monthly average revenue per customer grew to $16.

Those growth rates were incredible, yet Nu's stock has still declined about 25% this year and trades at just 12 times next year's earnings. Is it an undervalued growth play in this frothy market?

Why did Nu's stock decline? From 2021 to 2025, Nu's revenue grew at a 75% CAGR. It turned profitable in 2023, and its EPS nearly doubled in 2024 and rose 45% in 2025. From 2025 to 2028, analysts expect its revenue and EPS to grow at CAGRs of 31% and 35%, respectively.

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Those growth rates are impressive, but three issues are compressing its valuations. First, it's expanding more aggressively into Mexico and Colombia to reduce its dependence on its core Brazilian market.

That expansion increased its credit risks, since both markets require higher funding costs and credit loss allowances than Brazil. Nu's expansion of its lower-margin secured lending and payroll-backed loan businesses exacerbated that pressure.

Second, Nu earns most of its revenue in Brazilian Reais, Mexican Pesos, and Colombian Pesos but reports its earnings in U.S. dollars. As a result, it faces persistent headwinds from a strong U.S. dollar -- which will only become stronger if the Fed raises its rates this year. Lastly, the market still values Nu like a conventional bank rather than a high-growth fintech company.

Is Nu's stock a screaming bargain? I believe Nu's stock is a bargain at these levels. It's in the process of securing full bank charters in Mexico and a conditional approval in the U.S. to reduce its funding costs and expand its reach. It also recently launched a new $1.0 billion buyback program.

It won't bounce back anytime soon, but it could attract a lot more attention once its Mexican and Colombian markets mature, the dollar weakens, and investors value it as a growth play again.