Is Nu Holdings Stock a Buy Before Its First-Ever Investor Day on Dec. 8?

Nu Holdings (NYSE: NU) is the largest digital bank in Latin America and one of the largest digital banking platforms in the world. It's growing fast, but its stock is down 28% this year (as of Oct. 28).

The company has made some major moves lately, including opening an online international bank and entering the U.S. market. It's planning its first-ever investor day event on Dec. 8, and it will likely outline its goals and expansion plans. Should you buy Nu stock now?

Banking is changing all over the world

Nu has been operating in Brazil as a digital financial platform since 2014, giving it a first-mover's edge in the largest country in Latin America. It has broken down the high barriers to the financial system that previously locked out a huge portion of the country's vast pool of consumers, and it has since followed the same playbook in Mexico and Colombia, where it's quickly establishing a strong presence. It recently obtained a bank charter in Mexico and has applied for one in Brazil, and it has also been approved for one in the U.S., which gives it greater expansion opportunities.

Image source: Nu.

It demonstrates impressive quarterly performance like clockwork. Revenue increased 39% year over year in the second quarter, and net income increased 49%, reaching a record $1.1 billion thanks to a widening net margin. It had a fantastic 33% return on equity, and deposits reached $45.3 billion, 18% higher than last year and 6% higher than the previous quarter.

It added 4 million customers in the quarter for a total of 139 million, and it has since topped 140 million. Most of those -- 118 million -- are in Brazil, which has the largest population in the region. But it's adding new customers at a faster pace in Mexico and Colombia.

These customers are active on the platform. Nu reached an 83.5% engagement rate in the quarter, including hitting 86% in Brazil for the first time. Although a majority of the adult population in Brazil is already on the platform, management still sees huge opportunities in adding products and cross-selling.

Nu recently made some exciting moves, including the opening of a U.S.-based business and an international digital bank called Nu Global. This opens up huge new consumer bases and market opportunities.

Why the stock could soar on Dec. 8

So why is the stock down? It plunged in September after Bloomberg reported that it was in talks to buy U.K.-based digital bank Monzo, spurring concern about Nu's ability to profitably expand as much as it's hoping. Is it biting off more than it can chew? It had also become more expensive, although it currently trades at a price-to-earnings (P/E) ratio of 17 and a price-to-book ratio of 4.6.

But the main problem was the election of President Lula da Silva in Brazil this week. The market had anticipated his opponent winning, who was seen as more market friendly, and many companies that operate in Brazil saw their stock tank after the election.

Can that change with a great investor day? Investor day events don't necessarily move the needle on the stock, but if there's a worry the market is pricing in, management could address it. If the market likes what Nu says about improving credit metrics or how it plans to grow profitably in its new regions, the stock could jump after the event, especially because it's so cheap today.

Nu has already successfully expanded into new countries, and it should be able to replicate this success in other regions, too. Whether Nu stock rises after the event or not, it could be an excellent long-term candidate for your portfolio.

Jennifer Saibil has positions in Nu Holdings. The Motley Fool has positions in and recommends Nu Holdings. The Motley Fool has a disclosure policy.