We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Nu Holdings vs. Sezzle: Which Fintech Stock is the Better Bet Now?
Read MoreHide Full Article
Key Takeaways
Nu Holdings' Q1'25 revenues rose 40% and net income grew 74%, boosting EBITDA margin by 440 bps.
NU added over 6M users in Mexico and 1.5M in Colombia, showing strong expansion beyond Brazil.
SEZL's Q1'25 revenues surged 123.3% and operating income jumped 260.6% on rising purchase frequency.
Both Nu Holdings (NU - Free Report) and Sezzle (SEZL - Free Report) operate in the exponentially expanding fintech domain, trying to retain and capture a significant piece of the market. NU is one of the leading digital financial services platforms in the world, serving more than 118 million customers across Mexico, Brazil and Colombia. SEZL offers a payment solution in-store, at retail stores, and via a payment solution that creates a bridge between consumers and merchants for credit at the point-of-sale.
With the fintech sector anticipated to witness 15.3% CAGR from 2025-2030, the question lingers: Which stock holds more upside potential? Let us delve deeper to find out which stock offers a more compelling investment story.
The Case for Nu Holdings
Nu Holdings’ cloud-centric, mobile-first infrastructure is a standout feature that serves customers at a sliver of the cost of traditional banks. This feature is instrumental in providing the company with an edge in the underserved markets, evidenced by 19% year-over-year growth in customers during the March-end quarter.
Talking about customers, we have observed NU’s model to facilitate low customer acquisition costs and high engagement, resulting in strong margins. NU’s solid financials capture the efficiency of its lean model. During the first quarter of 2025, 40% year-over-year growth in revenues, with a 74% surge in net income, signaled effective cost control, thus pushing the margins up, with the EBITDA margin growing 440 basis points (bps) year over year and net margin displaying an outstanding 400 bps rise.
Catering to the underbanked carries the inherent risk to credit quality. We are impressed with Nu Holdings' underwriting and credit risk management capabilities, evidenced by the 15-90 NPL ratio rising 60 bps. With solid financials and strong credit risk management strategies, NU has found expansion on its plate. Now that Brazil is in its grip, Mexico and Colombia do not seem farfetched to dominate. With over 6 million customers in Mexico and 1.5 million in Colombia, the company is leveraging its high scalability and products to gain a first-mover advantage in these emerging fintech markets.
Now, keeping these positives aside, we find that the fintech domain puts immense competitive pressure on the company. SoFi, a well-established and major player in this market, threatens Nu Holdings’ market share with its strong product suite and capital stance. Similarly, there are multiple companies with innovative ideas that can easily hamper Nu Holdings’ economic moat.
The Case for Sezzle
SEZL has created its business from the ground up, serving the underbanked population, a niche that presents an immense growth opportunity. With the digital payment market expected to witness an 11.8% CAGR from 2023 to 2028, Sezzle has ample opportunity to capture a fair piece of the market pie.
Sezzle has solidified its position within the fintech domain with multiple offerings, Sezzle Balance and Money IQ being two of the many that elevate customer experience. These consumer-targeted offerings have paid dividends in terms of boosting financials as customer purchase frequency hikes to 6.5X from the year-ago quarter’s 4.5X. Higher transactions resulted in the top line exploding by 123.3% year over year during the first quarter of 2025. The gross merchandise volume registered a significant 64.1% increase, with operating income skyrocketing to 260.6%. Overall, these metrics portray a tale of operational leverage and scalability.
The consistency-play in product innovation keeps SEZL’s demand burning among its customers. Products like On-Demand, launched in October 2024, are instrumental in increasing the flexibility to Pay-in-4 wherever Visa is accepted. This customer-oriented approach has mitigated the challenge of its direct merchant partnership, transforming the company into a Buy Now, Pay Later solution (BNPL) that operates anywhere.
As a BNPL solution operator, Sezzle navigates through the dynamic rules and regulations. Although BNPL is considered to have less stringent regulations than traditional credit, concerns over consumer debt, transparency, and dispute resolution demand scrutiny. For instance, some states, including New York, are imposing their BNPL regulations, potentially impacting SEZL by increasing compliance costs. Furthermore, stricter affordability checks and restrictions around the business model might reduce the pace of customer acquisition, hampering its margins.
How Do Estimates Compare for NU & SEZL?
The Zacks Consensus Estimate for NU’s 2025 sales is pegged at $14.9 billion, implying 29.4% year-over-year growth. The consensus estimate for earnings is pegged at 54 cents per share, indicating 20% year-over-year growth. One earnings estimate for 2025 has moved north in the past 60 days, versus one southward revision.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for SEZL’s 2025 sales is pegged at $441.8 million, implying 62.9% year-over-year growth. The consensus estimate for earnings in 2025 is pegged at $3.26, a 77.2% rise from the preceding year. There has been no change in analyst estimates or revisions lately.
Image Source: Zacks Investment Research
NU Trades Cheaper Than SEZL
Nu Holdings is currently trading at a forward 12-month P/E ratio of 20.7X, which is slightly above the 12-month median of 20.53X. Sezzle is trading at 36.97X, higher than the 12-month median of 20.36X. NU, which currently hovers marginally higher than its historic figure, trades substantially lower than SEZL, making it a cheaper stock.
Image Source: Zacks Investment Research
NU is a Better Option Than Sezzle
Both Nu Holdings and SEZL serve the needs of the underbanked. NU’s strong financials and ability to expand, along with effective credit risk management, have allowed it to succeed in the highly competitive fintech market. Meanwhile, Sezzle’s product innovation has built a large customer base, increasing revenue, operational efficiency, and scalability. However, regulations in the BNPL industry threaten SEZL’s operations.
Despite both stocks being fundamentally strong, NU is a better bet for investors since it trades significantly cheaper than SEZL, offering investors a bandwidth to witness growth.
Image: Bigstock
Nu Holdings vs. Sezzle: Which Fintech Stock is the Better Bet Now?
Key Takeaways
Both Nu Holdings (NU - Free Report) and Sezzle (SEZL - Free Report) operate in the exponentially expanding fintech domain, trying to retain and capture a significant piece of the market. NU is one of the leading digital financial services platforms in the world, serving more than 118 million customers across Mexico, Brazil and Colombia. SEZL offers a payment solution in-store, at retail stores, and via a payment solution that creates a bridge between consumers and merchants for credit at the point-of-sale.
With the fintech sector anticipated to witness 15.3% CAGR from 2025-2030, the question lingers: Which stock holds more upside potential? Let us delve deeper to find out which stock offers a more compelling investment story.
The Case for Nu Holdings
Nu Holdings’ cloud-centric, mobile-first infrastructure is a standout feature that serves customers at a sliver of the cost of traditional banks. This feature is instrumental in providing the company with an edge in the underserved markets, evidenced by 19% year-over-year growth in customers during the March-end quarter.
Talking about customers, we have observed NU’s model to facilitate low customer acquisition costs and high engagement, resulting in strong margins. NU’s solid financials capture the efficiency of its lean model. During the first quarter of 2025, 40% year-over-year growth in revenues, with a 74% surge in net income, signaled effective cost control, thus pushing the margins up, with the EBITDA margin growing 440 basis points (bps) year over year and net margin displaying an outstanding 400 bps rise.
Catering to the underbanked carries the inherent risk to credit quality. We are impressed with Nu Holdings' underwriting and credit risk management capabilities, evidenced by the 15-90 NPL ratio rising 60 bps. With solid financials and strong credit risk management strategies, NU has found expansion on its plate. Now that Brazil is in its grip, Mexico and Colombia do not seem farfetched to dominate. With over 6 million customers in Mexico and 1.5 million in Colombia, the company is leveraging its high scalability and products to gain a first-mover advantage in these emerging fintech markets.
Now, keeping these positives aside, we find that the fintech domain puts immense competitive pressure on the company. SoFi, a well-established and major player in this market, threatens Nu Holdings’ market share with its strong product suite and capital stance. Similarly, there are multiple companies with innovative ideas that can easily hamper Nu Holdings’ economic moat.
The Case for Sezzle
SEZL has created its business from the ground up, serving the underbanked population, a niche that presents an immense growth opportunity. With the digital payment market expected to witness an 11.8% CAGR from 2023 to 2028, Sezzle has ample opportunity to capture a fair piece of the market pie.
Sezzle has solidified its position within the fintech domain with multiple offerings, Sezzle Balance and Money IQ being two of the many that elevate customer experience. These consumer-targeted offerings have paid dividends in terms of boosting financials as customer purchase frequency hikes to 6.5X from the year-ago quarter’s 4.5X. Higher transactions resulted in the top line exploding by 123.3% year over year during the first quarter of 2025. The gross merchandise volume registered a significant 64.1% increase, with operating income skyrocketing to 260.6%. Overall, these metrics portray a tale of operational leverage and scalability.
The consistency-play in product innovation keeps SEZL’s demand burning among its customers. Products like On-Demand, launched in October 2024, are instrumental in increasing the flexibility to Pay-in-4 wherever Visa is accepted. This customer-oriented approach has mitigated the challenge of its direct merchant partnership, transforming the company into a Buy Now, Pay Later solution (BNPL) that operates anywhere.
As a BNPL solution operator, Sezzle navigates through the dynamic rules and regulations. Although BNPL is considered to have less stringent regulations than traditional credit, concerns over consumer debt, transparency, and dispute resolution demand scrutiny. For instance, some states, including New York, are imposing their BNPL regulations, potentially impacting SEZL by increasing compliance costs. Furthermore, stricter affordability checks and restrictions around the business model might reduce the pace of customer acquisition, hampering its margins.
How Do Estimates Compare for NU & SEZL?
The Zacks Consensus Estimate for NU’s 2025 sales is pegged at $14.9 billion, implying 29.4% year-over-year growth. The consensus estimate for earnings is pegged at 54 cents per share, indicating 20% year-over-year growth. One earnings estimate for 2025 has moved north in the past 60 days, versus one southward revision.
The Zacks Consensus Estimate for SEZL’s 2025 sales is pegged at $441.8 million, implying 62.9% year-over-year growth. The consensus estimate for earnings in 2025 is pegged at $3.26, a 77.2% rise from the preceding year. There has been no change in analyst estimates or revisions lately.
NU Trades Cheaper Than SEZL
Nu Holdings is currently trading at a forward 12-month P/E ratio of 20.7X, which is slightly above the 12-month median of 20.53X. Sezzle is trading at 36.97X, higher than the 12-month median of 20.36X. NU, which currently hovers marginally higher than its historic figure, trades substantially lower than SEZL, making it a cheaper stock.
NU is a Better Option Than Sezzle
Both Nu Holdings and SEZL serve the needs of the underbanked. NU’s strong financials and ability to expand, along with effective credit risk management, have allowed it to succeed in the highly competitive fintech market. Meanwhile, Sezzle’s product innovation has built a large customer base, increasing revenue, operational efficiency, and scalability. However, regulations in the BNPL industry threaten SEZL’s operations.
Despite both stocks being fundamentally strong, NU is a better bet for investors since it trades significantly cheaper than SEZL, offering investors a bandwidth to witness growth.
NU and SEZL carry a Zacks Rank #3 (Hold) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.