Here is a new story where the CEO, Velez, says NU might move their coroporate domicile to Europe and start opening up operations in the US.
Moves like this should extend the growth runway well beyond it’s current limits being a SA only enterprise.
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They also announced yesterday that they have reached 10M customers in Mexico, doubling YoY. All of their announcements lately are giving me more confidence in my position. I haven’t yet added but I’m taking them off my trim list for now.
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These are all good news! NU is still 9% of my portfolio. The downturn of the Brazilian economy has generated two much noise around this company. But the business itself remains strong on a FX-neutral basis. It’s clearly winning the LATAM market. With a PE of only 32.9, a lot of pessimistic must have been priced in. I see no reasons to trim any shares at this price.
Luffy
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Recent shareholder here so i don’t profess to know the company deeply. Does NU actually have a right to win outside of its home markets? Is the service superior to neobank offerings in the developed world, or do the founders have a strong network or other assets that might ease an intentional expansion?
I’m reminded of Sea Limited’s disastrous over expansion, so there’s some concern that one of my portfolio companies might perhaps be making a similarly ill advised move.
Thoughts from more knowledgeable investors in this company welcomed.
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I was kind of wondering about this too when I read that news. And I don’t have a straight answer for you in terms of the service.
But, I do know that behaviors in Latin America tend to cross borders. For instance, Whatsapp was huge in Latin America and got its start in the US primarily through people communicating with family/friends back in their original communities. Of course, that’s a communication app vs. a banking App. But I really believe that if Nu can become big in Mexico, it has a good chance of grabbing US market share eventually. But that’s a number of years away, surely.
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I wonder why it would take ‘years?’ I think it could happen very quickly.
There seems to be a void to fill in on line banking that I have long waited for some one to enter.
For example, Square(XYZ) promised in early days they were getting their banking licence, and could become a full service banking app.
Their cash app card is good for many things but not full service banking. I think people long for this type of full service global online banking.
One bank, one world, no borders. There is a demand vacuum and NU Bank could very well fill the void. Lacking the need for bricks and morter, adaptation could occur as quick, or quicker than that of smart phones.
NCTim
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NU had some advantages in Latin America, the people in Brazil did not trust the established banks, the government froze 80% of funds in banks in the 1990s. The poor Brazilians were unable to get bank accounts. But a huge demand for banks came out when Brazil came out with PIX in 2020. A digital way to transfer money for free in Brazil.
So NU came out at the perfect time and place in Brazil. By being a new and friendly way for the poor to bank. Allowed it to grow rapidly and become a very profitable bank. I don’t think they would take off as fast in the United States. Banks in the US have a higher penetration into the US population. Banks also have a sticker model with automatic payments making it more difficulty for customers to switch banks. If NU comes into the US it would do well but it would grow a lot slower than they have in any other market.
Drew
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