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NU Stock Rallies 23% in October: Is There Still Room for More Gains?
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Key Takeaways
Nu Holdings surged 23.1% in October, fueled by Brazil's political optimism and strong earnings growth.
NU's Q2 net income jumped 49% to $1.1 billion, while its customer base reached 139 million.
NU trades below peers on forward sales, but rising delinquencies and U.S. expansion costs pose risks.
October's sharp rebound in Nu Holdings Ltd. (NU - Free Report) reflects more than enthusiasm for digital banking. Investors are reassessing Brazil's political outlook just as the company broadens its financial services business. That combination has lifted expectations, making the durability of Nu's growth an important question.
So far in October, NU shares rose approximately 23.1%. Over the same period, SoFi Technologies (SOFI - Free Report) slipped 0.4%, while Chime Financial (CHYM - Free Report) gained 4.8%. Nu Holdings alone jumped 13% on Oct. 5, after Brazil's first-round presidential vote raised investor hopes for a more market-friendly economic direction.
The rally also follows NU's first billion-dollar quarterly profit and its September launch in the United States. Both developments point to a business that is expanding beyond its original Brazilian credit-card offering. Still, currency movements, lending risks and the costs of entering new markets could influence how much of the recent optimism translates into lasting returns.
Image Source: Zacks Investment Research
Customer Engagement and Profitability Support NU’s Growth
NU's second-quarter results showed that customer growth is turning into stronger earnings. The company served 139 million customers, and its monthly activity rate climbed to 83.5%. Average monthly revenue per active customer reached $17. Gross revenues increased 39% year over year on a currency-neutral basis to nearly $5.9 billion, while net income climbed 49% to $1.1 billion. An efficiency ratio of 19.5% also suggests that Nu Holdings is preserving its low-cost model despite continued investment.
In Brazil, which accounts for nearly 118 million customers, the opportunity increasingly lies in deepening existing relationships. The company introduced Croma in July to offer tailored services to customers between its mass-market and higher-income segments. Mexico offers another route to growth: its banking launch in August supports a broader range of products and stronger primary banking relationships. Both initiatives could raise revenue per customer without requiring user additions to maintain their earlier pace.
NU's NuFormer platform is another part of that strategy. It supports credit decisions and customer service, with AI agents handling more than 60% of support conversations in Brazil. Better data may improve efficiency and loan selection, although the benefits need testing through economic cycles.
Will International Expansion Sustain NU's Momentum?
September's U.S. rollout expands the company's potential market considerably. Through partner Lead Bank, NU introduced an account initially offering 3.5% annual percentage yield and a credit card offering 1.5% cashback. Its Nu Global service targets cross-border money management in more than 35 countries, using digital-dollar and digital-euro balances. These businesses widen Nu's reach, but their contributions to profits remain uncertain.
Competition is substantial. SoFi Technologies combines digital deposits, lending and other financial products, while Chime Financial focuses on mobile-first everyday banking and payroll-linked relationships. Both aim to become their users' primary financial platform. Nu brings experience in acquiring customers cheaply, but its credit models need U.S.-specific data. Management expects 12 to 30 months to build enough local data to bring its credit models closer to the confidence levels achieved in Latin America, suggesting a measured rather than rapid expansion in lending.
NU’s Estimate Revisions Depict an Improving Outlook
NU’s estimates for both 2026 and 2027 have increased over the past 60 days. The figures also suggest a year-over-year increase of 38.71% and 35.12%, respectively.
Image Source: Zacks Investment Research
NU’s Credit Quality Remains a Key Risk
Nu Holdings' credit portfolio grew 37% year over year to $39.4 billion in the second quarter of 2026, supported by higher credit-card and unsecured lending balances. Early-stage delinquencies improved 16 basis points to 4.8%, while 90-day-plus delinquencies increased 35 basis points to 6.9%. Although management attributed the trend largely to seasonality and loan mix, faster unsecured lending growth could raise future provisions. Encouragingly, risk-adjusted net interest margin reached 12.4%, reflecting stronger credit profitability during the period.
NU's Valuation Appears Reasonable Compared With Peers
Despite October's rally, NU trades at approximately 2.84 times forward 12-month sales, below SoFi Technologies at 3.60 times and Chime Financial at 3.29 times. The discount appears reasonable considering the company's strong customer growth, improving revenue per active customer and second-quarter return on equity of 33%.
NU's exposure to Latin American currencies, Brazil's political environment and consumer credit risks may justify some valuation gap. The recent rally also reduces the margin for disappointment. Sustained earnings growth and disciplined credit performance will be crucial to supporting further gains in its shares over the coming quarters.
Valuation
Image Source: Zacks Investment Research
What Should Investors Do With NU Stock?
Nu Holdings' rally has operating strength behind it. Rising engagement, improving monetization and profitable operations provide a foundation for growth in Brazil, Mexico and potentially the United States. Its forward sales multiple also looks reasonable alongside those of U.S. digital finance peers.
However, a 23% move within days has already captured considerable optimism about Brazil's political direction. Credit performance and the cost of building the U.S. business still warrant attention. For existing shareholders, keeping their current exposure while waiting for fresh earnings and evidence of international execution appears more measured than adding aggressively after such a quick advance over the coming quarters.
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NU Stock Rallies 23% in October: Is There Still Room for More Gains?
Key Takeaways
October's sharp rebound in Nu Holdings Ltd. (NU - Free Report) reflects more than enthusiasm for digital banking. Investors are reassessing Brazil's political outlook just as the company broadens its financial services business. That combination has lifted expectations, making the durability of Nu's growth an important question.
So far in October, NU shares rose approximately 23.1%. Over the same period, SoFi Technologies (SOFI - Free Report) slipped 0.4%, while Chime Financial (CHYM - Free Report) gained 4.8%. Nu Holdings alone jumped 13% on Oct. 5, after Brazil's first-round presidential vote raised investor hopes for a more market-friendly economic direction.
The rally also follows NU's first billion-dollar quarterly profit and its September launch in the United States. Both developments point to a business that is expanding beyond its original Brazilian credit-card offering. Still, currency movements, lending risks and the costs of entering new markets could influence how much of the recent optimism translates into lasting returns.
Image Source: Zacks Investment Research
Customer Engagement and Profitability Support NU’s Growth
NU's second-quarter results showed that customer growth is turning into stronger earnings. The company served 139 million customers, and its monthly activity rate climbed to 83.5%. Average monthly revenue per active customer reached $17. Gross revenues increased 39% year over year on a currency-neutral basis to nearly $5.9 billion, while net income climbed 49% to $1.1 billion. An efficiency ratio of 19.5% also suggests that Nu Holdings is preserving its low-cost model despite continued investment.
In Brazil, which accounts for nearly 118 million customers, the opportunity increasingly lies in deepening existing relationships. The company introduced Croma in July to offer tailored services to customers between its mass-market and higher-income segments. Mexico offers another route to growth: its banking launch in August supports a broader range of products and stronger primary banking relationships. Both initiatives could raise revenue per customer without requiring user additions to maintain their earlier pace.
NU's NuFormer platform is another part of that strategy. It supports credit decisions and customer service, with AI agents handling more than 60% of support conversations in Brazil. Better data may improve efficiency and loan selection, although the benefits need testing through economic cycles.
Will International Expansion Sustain NU's Momentum?
September's U.S. rollout expands the company's potential market considerably. Through partner Lead Bank, NU introduced an account initially offering 3.5% annual percentage yield and a credit card offering 1.5% cashback. Its Nu Global service targets cross-border money management in more than 35 countries, using digital-dollar and digital-euro balances. These businesses widen Nu's reach, but their contributions to profits remain uncertain.
Competition is substantial. SoFi Technologies combines digital deposits, lending and other financial products, while Chime Financial focuses on mobile-first everyday banking and payroll-linked relationships. Both aim to become their users' primary financial platform. Nu brings experience in acquiring customers cheaply, but its credit models need U.S.-specific data. Management expects 12 to 30 months to build enough local data to bring its credit models closer to the confidence levels achieved in Latin America, suggesting a measured rather than rapid expansion in lending.
NU’s Estimate Revisions Depict an Improving Outlook
NU’s estimates for both 2026 and 2027 have increased over the past 60 days. The figures also suggest a year-over-year increase of 38.71% and 35.12%, respectively.
Image Source: Zacks Investment Research
NU’s Credit Quality Remains a Key Risk
Nu Holdings' credit portfolio grew 37% year over year to $39.4 billion in the second quarter of 2026, supported by higher credit-card and unsecured lending balances. Early-stage delinquencies improved 16 basis points to 4.8%, while 90-day-plus delinquencies increased 35 basis points to 6.9%. Although management attributed the trend largely to seasonality and loan mix, faster unsecured lending growth could raise future provisions. Encouragingly, risk-adjusted net interest margin reached 12.4%, reflecting stronger credit profitability during the period.
NU's Valuation Appears Reasonable Compared With Peers
Despite October's rally, NU trades at approximately 2.84 times forward 12-month sales, below SoFi Technologies at 3.60 times and Chime Financial at 3.29 times. The discount appears reasonable considering the company's strong customer growth, improving revenue per active customer and second-quarter return on equity of 33%.
NU's exposure to Latin American currencies, Brazil's political environment and consumer credit risks may justify some valuation gap. The recent rally also reduces the margin for disappointment. Sustained earnings growth and disciplined credit performance will be crucial to supporting further gains in its shares over the coming quarters.
Valuation
Image Source: Zacks Investment Research
What Should Investors Do With NU Stock?
Nu Holdings' rally has operating strength behind it. Rising engagement, improving monetization and profitable operations provide a foundation for growth in Brazil, Mexico and potentially the United States. Its forward sales multiple also looks reasonable alongside those of U.S. digital finance peers.
However, a 23% move within days has already captured considerable optimism about Brazil's political direction. Credit performance and the cost of building the U.S. business still warrant attention. For existing shareholders, keeping their current exposure while waiting for fresh earnings and evidence of international execution appears more measured than adding aggressively after such a quick advance over the coming quarters.
At present, NU carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.