NU is worth watching or holding a small position; strong results and unique cost structure support long-term growth despite US expansion risks.

Yes, stock number three belongs to a completely different sector than the two stocks we talked about today. I want to talk about Nu Holdings. This is the parent company of Nubank.

It is a digital bank that was founded in Brazil in 2013.

At that time, the banking sector in Brazil was dominated by five established institutions, which controlled about 80% of the market. Furthermore, they imposed some of the highest fees and rates in the world while customers were waiting to receive basic service.

So, Nubank’s response was a no-fee purple credit card that could be ordered entirely by phone, and that was the beginning of a fully integrated digital banking platform, now based on accounts, loans, investments and insurance, built entirely on a cloud infrastructure with no physical branches at all.

Therefore, Nu Holdings Nubank makes money in the same way as any banking institution, meaning it has income from interest on credit granted and on invested deposits, but its cost structure is completely different from that of a traditional bank.

Nubank charges about one dollar per month for customer service, and about five dollars for acquiring a single customer. Much of this depends on verbal recommendations. To put it in context, Nubank's Net Promoter Score is around 90.

As for funding, it uses securitized trust funds called FIDCs for about 35% of its funding, so it does not rely on deposits collected through branches. Currently, in Brazil they have about 8,000 employees serving more than 100 million customers, with each employee supporting more than 15,000 customers and generating nearly 1.7 million in annual revenue.

This is a level of productivity that many traditional branch-based banks cannot match. This is the structure that allowed Nubank to profitably serve customers that existing banks previously considered unprofitable.

Since then, the company has expanded into Mexico and Colombia, exceeding 139 million total customers, and has even obtained a full Brazilian banking license. This year, the company began entering the US market, including offering savings with an initial annual return of 3.5%.

Berkshire Hathaway has retained a stake in the company since its initial public offering in December 2021. Therefore, Nu is effectively carrying out two expansions at once. It is deepening its licensing and product range in markets such as Mexico, and is also expanding in the United States.

This is a market, unlike Brazil, where the pricing of existing banks cannot be described as clearly unjustified. Therefore, Nubank has to gain traction in a much more difficult way.

The company has introduced artificial intelligence tools. There is a digital assistant you own called "NoFormer". It also plans to launch a suite of AI-powered private banking services.

The company’s first-ever investor day is scheduled for December 2026 in New York. Therefore, there will be more details there regarding expectations related to the US strategy.

To put some numbers in perspective, the company announced its second-quarter earnings in mid-August. Revenues reached approximately $6 billion, an increase of approximately 40% year-on-year.

Their net income exceeded one billion dollars for the first time. That was a 50% year-on-year increase.

Now, the stock has actually experienced a period of volatility. There was a sharp decline after the earnings announcement. We have seen a general decline in morale. In fact, the biggest driver of the company’s future growth is also the riskiest: the US market.

The US banking market is the largest in the world, so acquiring a modest share would be huge compared to NuBank's current size.

However, there are risks within its existing customer base, with regard to selling loans, investments and insurance to a base that still mostly uses one product today. Mexico and Colombia are already large in terms of the number of NuBank customers, but they are still in an early stage of expansion compared to Brazil.

Therefore, there is still an exceptional opportunity for the company to grow there. Now, the number of customers and profitability grow together, rather than one at the expense of the other.

I think that when we look at this company, there is a gap between the record results and the low share price. Much of that stems from questioning the growth story. Can this growth rate be maintained once they expand into the US market?

There is also regulatory uncertainty in Latin America. That was also part of what we saw affecting the stock.

However, this company continues to achieve strong results and rapid growth with a cost structure that many of its competitors have been unable to replicate. Expansion in the United States is essential, but its growth in Latin America is proving compelling over time.

It is certainly a stock worth watching, or perhaps even taking a small position in if you are a long-term investor who adopts a buy-and-hold strategy.