Nu Holdings Poised for Growth With Vast User Base and ARPAC Upside
Nu Holdings Ltd., a leading digital bank, is poised for growth with its vast user base and potential for increased Average Revenue Per Active Customer (ARPAC). The company's shares are held by several prominent investment funds, and analysts see it as a long-term opportunity despite some risks.
NU serves 122.7 million users, with an average ARPAC of $12.2. Mature cohorts generate $27-$28 per month, and incumbents command around $45. With modest assumptions, such as a 5% user compound annual growth rate (CAGR), revenue could reach $37.6 billion, and net income could hit $7.5 billion. This implies a market cap of $150 billion and a 17.5% annualized return. However, risks include higher credit costs, ARPAC compression, FX translation exposure, and scaling challenges.
Investment funds like Amundi MSCI EM Latin America UCITS ETF, Disruptive Technologies ex Crypto R fund, and Morgan Stanley Emerging Leaders Equity Fund hold significant allocations to Nu Holdings. Despite this, NU is not among the 30 most popular stocks among hedge funds, with only 97 portfolios holding it at the end of the second quarter. As of September 26th, NU's share was trading at $15.78, with trailing and forward P/E ratios of 33.60 and 19.38 respectively.
A bullish thesis on Nu Holdings was published on PatchTogether Investing's Substack. The company presents a long-term growth opportunity due to its under-monetized user base and substantial ARPAC upside. Even under conservative scenarios, Nubank's revenue could reach $29.45 billion, and net income could hit $5.89 billion by year five. This implies a market cap of $88 billion to $147 billion and 31%-119% upside from today's valuation. Management expects ARPAC to rise steadily toward incumbent levels while maintaining a low $1 cost to serve, creating significant operating leverage as cohorts mature.
Nu Holdings Ltd. offers a compelling long-term investment case, with a vast user base and significant ARPAC upside. Despite some risks, the company's growth potential is evident, and several prominent investment funds have recognized its value. As the company continues to mature, it is well-positioned to capitalize on its under-monetized user base and generate substantial returns for investors.
Read also:
- U.S. CBP's Operation Plaza Spike Boosts Fentanyl Seizures Along Arizona-Mexico Border
- Regensburg Court Sentences Pizza Delivery Owner for Illegal Employment, Tax Evasion
- Tesla's EV Market Share Plummets in Europe, US Competition Intensifies
- Catastrophe at a U.S. Steel facility in Pennsylvania results in the loss of two lives. crucial details unveiled
