Nu Holdings, a Latin American fintech company, has caught the attention of renowned investors Warren Buffett and Cathie Wood. Buffett’s Berkshire Hathaway owns more than $1.4 billion in Nu shares, while Wood’s ARK Invest holds approximately 1.5 million shares, worth around $20 million. Nu Holdings offers a suite of financial services directly to customers through their smartphones, disrupting the traditional banking industry in Latin America.
The company operates in Brazil, Mexico, and Colombia, and has amassed over 100 million customers since its inception in 2013. Nu’s success can be attributed to its innovative approach, offering advanced services at lower costs compared to the stodgy incumbents that previously dominated the market. The demand for Nu’s services has been immense, with its customer base growing rapidly over the past decade.
New product lines, such as its crypto trading platform, have also seen significant uptake, surpassing 1 million users in the first month of operation. Financially, Nu has demonstrated strong performance. Its sales have grown from just over $2 billion two years ago to nearly $8 billion today.
Buffett and Wood invest in Nu
The company has also achieved profitability, with analysts expecting earnings to grow at an average of 54% annually over the next five years. Despite its impressive growth and backing from high-profile investors, Nu Holdings remains relatively unknown outside of its operating markets.
This presents an opportunity for investors to buy shares at a potentially discounted valuation. Currently, Nu shares trade at 32 times forward earnings, which may be attractive considering the company’s growth trajectory. However, investors should be aware that growth stocks like Nu can be volatile.
After its IPO in 2021, Nu shares lost 70% of their value in the first year of trading, before rebounding. Patience and a long-term perspective are crucial when investing in rapid-growth stocks. For those looking to invest in a high-potential growth stock, Nu Holdings could be a compelling option.
With its innovative approach, strong financial performance, and backing from respected investors, the company has the potential to continue its impressive growth in the years to come.
