Where Will Nu Holdings Be in 3 Years?

It may not be a familiar name to the average American. If you're an investor who regularly looks at stocks a bit off the beaten path, however, Nu Holdings (NYSE: NU) has very likely popped up on your radar as a growth prospect -- and deservedly so.

Last year's 43% increase in revenue nearly doubled its net income, extending a long-standing streak that's expected to persist at a similar pace for at least the next several years. You'd be hard-pressed to find a more promising pick with a comparable risk profile.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Where might Nu be three years from now, and is the stock worth owning between now and then? The answers to both questions are below. But, first things first ... what the heck is Nu Holdings?

Nu Holdings is a neobank

Nu Holdings is an online bank. It's only an online bank, in fact, which categorizes it as a so-called neobank. Yet, it still offers all the services you'd expect from a more traditional brick-and-mortar institution, including checking and savings accounts, loans, investment brokerage, credit cards, and even insurance.

As of the end of the first quarter, Nu had $54 billion in assets on its books, $31.6 billion of which were the collective deposits of its 118.6 million customers. The quarter's revenue of more than $3.2 billion was up 19% year over year, improving net income from $379 million in the comparable quarter a year earlier to $557 million this time around. And as was noted, this forward progress is just part of a much bigger trend. Not bad.

Data by YCharts.

So why haven't you heard of it? The bank only operates in Latin America and South America. Indeed, it only does business in Brazil, Mexico, and Colombia, with the vast majority of its business being done in Brazil, where it's headquartered.

It's this geography that makes the bullish argument here so juicy.

The right place at the right time

No two "coming of age" stories are ever exactly alike. But the parallels between North America 20 years ago and South America now are stark. Although mobile phones have been available in the market since their advent in the 1990s, for instance, they've only become commonplace in South America within just the past few years. Indeed, unlike in the United States, the region's foray into the smartphone era is still accelerating. Telecom-technology market research outfit Canalys reports that smartphone shipments to Latin America reached a record-breaking pace of 137 million units last year, versus a population of around 667 million.

The potential for the market's neobanking industry is obvious. As was the case in North America, it won't take Latin and South Americans long to discover and then fall in love with the convenience of turning a mobile device into a digital personal banker. It's already happening. Payments & Commerce Market Intelligence (of Americas Market Intelligence) notes that digital or electronic payments now facilitate 60% of the continent's consumer spending, while Mordor Intelligence expects Latin America's mobile payments market to grow at an average annualized pace of just over 24% through 2030.

Nu is more than just payments, of course. But the more comfortable this crowd gets with using their smartphones as a means of making purchases, the more comfortable they'll become using their mobile devices as full-blown banking tools.

Image source: Getty Images.

Nu Holdings has already more than proven that it can attract and keep customers. The company reports that it serves about 60% of Brazil's adults, while nearly 30% of this crowd considers Nu their primary bank. That's impressive, but also leaves lots of room for more growth.

Even as it further penetrates Brazil, Mexico is its next big growth target. It doubled its customer base there to 10 million last year. Yet, that's still only about one-tenth of that country's population.

Predictions

Nobody can predict the future with perfection. So, take these guesses with a grain of salt. Still, in most cases, they're simply extensions of existing trends, supported by well-reasoned growth outlooks.

Regarding its customer count, look for Nu to be serving on the order of 180 million people by 2028. These customers are going to become more comfortable with the idea of neobanking the longer Nu is around, meaning they'll grow more willing to make bigger deposits and use more of its services. As such, look for total assets to double between now and then, nearing $100 billion.

Greater scale also means a more cost-effective operation. Ergo, don't be surprised if last year's net income of just $2 billion and per-share earnings of $0.40 triple to something in the ballpark of $6 billion and $1.20 per share (respectively) for 2028 ... a guess that analysts are already on board with, by the way.

Of course, the prediction that many investors are most interested in is the stock's future price. Where is it going to be three years from now?

This is the guess that's most difficult to make. The cat is out of the bag, so to speak, and lots of investors have already plowed in, driving the stock's price up to a premium valuation that could be difficult to continue supporting for so long. So, given that the bulk of this company's bright future is already reflected in the stock's 2023 and 2024 gains, a more modest doubling of its present price near $12 per share is a reasonably realistic expectation for three years from now.

Just don't get too tangled up in the numerical predictions. Nobody really knows. Your job as an investor is just finding the right risk-adjusted opportunities, and having faith they'll perform at least as well as the market's overall average. In this light, Nu Holdings is a solid three-year prospect, regardless of any of the aforementioned guesses.

Should you invest $1,000 in Nu Holdings right now?

Before you buy stock in Nu Holdings, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nu Holdings wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $828,224!*

Now, it’s worth noting Stock Advisor’s total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 19, 2025

James Brumley has no position in any of the stocks mentioned. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.