Nu (NU) stock jumped 28% in January according to data provided by S&P Global Market Intelligence. Nu announced several new ventures and positive updates over the month, and investors are more reassured after some negativity in December.
Nu has demonstrated incredible growth over the past few years and is still reporting high double-digit revenue increases, including 56% year over year in the 2024 third quarter. But it's far from a mature company, and it's taking measures to expand its markets and keep it in growth mode for a very long time.
It operates an all-digital bank out of Brazil, and it has broken through the country's tight financial system, offering customers a better experience on its easy-to-use financial services app. It has bank accounts, lending products, investing tools, and more, and it's benefiting from an influx of new users as well as higher engagement from existing customers and new product adoption. In other words, it's a growth machine right now, and as it onboards more members, it can continue converting them into high-usage customers, ensuring a long growth runway.
It has nearly 100 million members in Brazil, or more than half of the adult population. Originally marketed to the mass consumer, it is also resonating with the higher-income population, and it's developing products targeted toward this lucrative market.
It recently reported that it has reached 10 million customers in Mexico, its second-largest market, doubling its membership in one year. It has launched several products there but attributed its recent growth to a recently launched high-interest savings account. It now has 12% of the adult population there, and it's rapidly growing in Colombia, its other current market.
Some other new updates include the expansion of its NuCel cellular data plans, an innovative, all-digital program, and a cash withdrawal program in Mexico with a partnering chain of 22,000 stores.
The market wasn't thrilled with Nu's investment in an international digital bank a few weeks ago, and it's also been concerned about economic volatility in some Latin American countries. On top of that, Warren Buffett sold some of Berkshire Hathaway's position in the third quarter. But Nu's more recent developments are reassuring investors that this is a company in growth mode, and its high and increasing profits create stability and confidence despite the volatility.
Nu stock trades at 36 times trailing-12-month earnings, which could be expensive for a bank, but looks like a bargain for a high-growth stock, and investors can feel comfortable buying Nu stock right now.
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