The main reason why every investor should know Nu Holdings (NU)

Key Points

• Nu Holdings is a dominant fintech focused on the Latin American market.
• Its growing crypto offerings should excite investors about its prospects.

Most investors have not yet heard of Nu Holdings. This is because the company operates only in three countries: Brazil, Colombia, and Mexico. Despite its limited recognition in the U.S., Nu dominates its local markets. More than half of Brazilian adults are customers of Nu, regularly using its debit cards and banking services.

But there is another factor that should make Nu a must-have name for investors around the world: its exposure to cryptocurrencies.

It is not a crypto power

Nu is no longer a banking giant in Latin America, but over time, it could become a crypto giant. This is because the company is a digital bank. It does not operate physical branches, allowing customers to access its services solely through a smartphone. Although it may not seem innovative today, in 2013, when Nu was launched, it was a revolutionary concept in Latin American markets.

A digital approach allowed Nu to reduce costs, lower prices, and quickly iterate new products. With just the push of a button, the company could activate a new service for tens of millions of customers at once. Its crypto service, for example, launched in 2022 and generated 1 million users in its first month!

Since the launch of Nu's crypto service, we haven't received many updates with concrete subscriber figures. But what we do know is that Nu has gradually added more options to its platform. Earlier this year, for example, Nu added support for 11 new cryptocurrencies. Today, its customers can seamlessly exchange fiat currencies for cryptocurrencies at any time, allowing them to easily pay with crypto in restaurants or stores - a capability that crypto optimists have long dreamed of.

Despite the decline in sales growth rates, Nu remains a true growth stock. This year, sales are expected to grow by 35%. Next year, they should grow another 27%. If cryptocurrency usage takes off, we could see Nu maintain these high growth rates for years.

I find it curious that while many traditional investors look towards American tech giants, this Latin American gem continues to go unnoticed. Its hybrid business model between traditional banking and crypto could represent the future of finance in emerging markets, where digital adoption tends to be faster than in mature economies. Personally, I believe that Nu's potential is undervalued precisely because it operates off the Wall Street radar.