Nu Stock Just Cratered, and It's 36% off Its High. Is This a Buying Opportunity?

Nu Holdings (NU) is a rapidly expanding digital bank based in Brazil, but it is venturing into new regions and experiencing rapid growth. Although it is down 36% from its peak, this could be an opportunity for savvy investors. Over the past decade, Nu has grown from a small start-up to a dominant player in Latin American finance, operating digital financial platforms in Brazil, Mexico, Colombia, and soon, the U.S. The company also launched an international bank servicing 35 countries.

With 140 million customers across its regions, Nu has a strong presence, particularly in Brazil, where over half of the adult population has an account. The company continues to add customers in Brazil at a rapid pace and is also increasing revenue from existing customers through cross-selling other products. Its average revenue per active customer (ARPAC) has been rising, and it added 4 million new customers in the second quarter, while ARPAC increased from $13 last year to $17 this year.

The activity rate reached 83.5% in the second quarter, and net interest margin improved to 12.4%, its highest mark in over a year, despite economic volatility in Brazil. Despite Brazil's electoral outcome not being favorable to the markets, the current price points to a bargain for a high-growth stock, with Nu trading at less than 11 times forward 1-year earnings.