Where Will Nu Holdings Be in 1 Year?

Nu Holdings (NYSE: NU) has quickly become a popular fintech tech stock as the company has grown its financial services across South America. The company's share price is up 256% over the past three years in response to Nu's solid profitability and expanding sales. But some investors have had a somewhat more muted response to Nu lately as economic concerns have grown.

So, what's happening with Nu right now, and where might the company be over the next year? Let's take a closer look at why Nu stock is likely still on the right track for more growth.

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What's happening with Nu right now

Most of Nu's fintech services are offered in Brazil, but it has also expanded into Mexico and Colombia. The company has built a large customer base of nearly 119 million customers, adding over 4 million in the last quarter alone. Nu has become a popular financial service for many people, with 30% of Brazilians using it as their primary bank.

Nu's revenue and earnings have followed its customer growth. Sales spiked 40% in the first quarter to $3.2 billion, and earnings per share of $0.12 were up 33% from the year-ago quarter.

The company's customers are engaged with its platform and services as well, with nearly 99 million monthly active users. Those customers are also spending more through Nu's services and have pushed up monthly average revenue per active customer (ARPAC) by 17% in Q1, on a currency-neutral basis.

Where Nu could be one year from now

As with any publicly traded company, there are a few things that could propel Nu forward over the next year, and a couple of headwinds investors should be aware of as well.

First, Nu will likely continue expanding its customers and revenue. The company recently received approval to operate as a bank in Mexico, which will enable it to offer more services to people in the country. Nu has 11 million customers in Mexico right now, but that number could increase substantially as it rolls out new financial services.

Nu's management didn't provide any guidance for the full year, but analysts' consensus estimates are for earnings per share to increase 27% in 2025 to $0.57 per share. Meanwhile, the average revenue estimate is for about $14.8 billion for the year, a more than 28% increase from 2024.

However, there is one negative trend Nu investors should be aware of, too. Interest rates are currently elevated in Brazil, and gross domestic product (GDP) growth is slowing. The same is true for Mexico, just as Nu is about to launch new services there.Neither situation means that Nu's business is in trouble, but the company could experience slower growth if customers from both countries are less optimistic about their economic situation.

All financial stocks are vulnerable to shifting economic conditions, so this issue isn't specific to Nu's business. However, it's important for investors to keep an eye on how any changes in Mexico's and Brazil's economies could affect the company.

Nu stock is likely a good long-term investment

Despite a few uncertainties, Nu is likely a good long-term investment. The company is profitable, successfully expanding services, and growing its customer base, and it's about to benefit from launching new services in Mexico.

Economic conditions could slow some of its growth over the next year, but as long as Nu continues adding sales at a rapid pace, the company still looks like it's on the right track. Nu's stock currently has a price-to-earnings ratio of about 28, which is on par with the broader S&P 500. That means that the stock isn't necessarily cheap, but it doesn't look overpriced either, given the company's prospects.

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