shareholders of New Holdings (New York Stock Exchange: NU) The first year or so after the company went public was a struggle. But after the lows it was a great story.
From the beginning of 2023, this fintech stocks has soared 243% (as of November 26th). Although it has been a rocky journey, the momentum continues into 2024.
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If I buy Nu now, will it last me a lifetime?
Gone are the days when consumers had to visit the nearest branch to carry out all formalities related to their money needs. Smartphones and the internet have changed financial services, allowing companies like Nu to offer things like bank accounts and credit cards to consumers digitally.
The company has grown like wildfire. Nu recorded $2.9 billion in revenue over the past three months, a 56% increase over the same period last year. The company now has 110 million customers, compared to just 48 million three years ago. Nu has a strong presence in its main market, Brazil, but is also starting to make progress in emerging countries such as Mexico and Colombia.
Investors should be optimistic about the future. According to Latin America Reports, an estimated 70% of the population in this part of the world remains unbanked or underbanked, presenting a huge opportunity for Nu.
Nu's sales growth has led to incredible profitability. net profit It reached $553 million in the third quarter, an increase of 107% year over year. Margins have expanded significantly over the past 12 months.
One of the tell-tale signs of a high-quality business is economic moat. Young companies generally have not yet established a sustainable competitive advantage. But I think Nu has reached a point where its moat is clear to the investment community.
As with any major banking provider, switching costs play a key role. Once consumers decide to use a particular company's financial services, link all their different accounts, and get used to how things work, they are less likely to switch providers. When customers can trust Nu as a reliable financial partner to meet their daily needs, they can develop a level of trust in Nu.
The average Nu customer uses four different products from the company. and 60% use Nu as their primary bank account. This proves that the business is well-positioned for long-term profits.
