• Data supports buying NU BANK
• 80 Million customers and growing, making Nu the largest digital bank in the world
• Revenue growth despite the ups and downs of the market
• Clear business plan with growth opportunity
• Long-term differentiation
Why buy NU Bank is a long-term investment
This company came to the market to stay. Try not to focus just on the 76% stock price growth of the last 3 months because you may be missing a great long-term opportunity. This company has the potential to keep the high growth over time like other high-tech companies. NU is not just a Bank supported by Warren Buffett. It has the technology, the innovation, and the willingness to keep revolutionizing the banking market. There is no limit yet for this company, they are growing at a faster pace than the most optimistic would not imagine.
What is NU
Nu is a completely digital financial experience that focuses on the user and practicality. The company offers a wide spectrum of financial services such as spending, saving, investing, borrowing, and protecting. In its role as one of the world's leading technology companies, Nu leverages proprietary technologies and innovative business practices to create easy-to-use, intuitive, convenient, low-cost, empowering, and human-centric financial solutions and experiences for individuals and SMEs.
What makes NU different? It targets the issues of the financial systems in Brazil, Colombia, and Mexico, providing digitalization to the youth, customization for adults, and easiness for elders. Additionally, Nu introduces the opportunity for millions of people to access financial services. It enables those marginalized by the financial system to have their first financial product with just a touch of their hands.
Let’s Talk Numbers
Now what we all were waiting for is the $$ and yes NU is making a lot of it. There are three key metrics to understand NU's performance: ‘ARPAC’ which stands for Average revenue per active customer, Customers, and Costs. This data is available on the NU Holdings Investor Relations website.
ARPAC & Cost to Serve
These indicators are another way to show the earnings strategy of the company. Both provide evidence of the operating leverage of the platform.
While the monthly revenue per active customer has doubled since the first quarter of 2021, the cost per customer remains the same and keeps a rate below a dollar. This indicator allows us to understand the potential of this company, which is day by day getting closer to the revenues of its competitors while keeping the operating cost as low as possible. By keeping a low operating cost, the company achieved one of the lowest efficiency ratios of the market.
Simply put, is the users that have a product with NU. Activity Rate is defined as monthly active customers divided by the total number of customers. This metric allows us to understand the rate of growth of the company and how they are increasing its market share in the different subsidiaries, all while increasing the engagement of its community.
With a clear strategy and simple business model, the company is growing its earnings at an incredible pace, increasing its revenue by over 6 times compared to the first quarter of 2021. Nu´s strategy shows how customer satisfaction and engagement, paired with operating efficiency can create a successful formula.
The investors support
It is okay if you still don’t trust me, but you should trust Warren Buffett and Cathie Wood, two investors with a “couple” of wins. Even though both have different approaches to investment strategies, both agree on holding NU stocks for the future. Cathie Wood targets innovation while Buffett prioritizes value investment with a strong balance sheet, luckily NU matches both.
We have already talked about the balance sheet but what about innovation? As a Fintech firm innovation is the way to do things, and digital banking was just the first step. Over the year NU has implemented new services such as payment platforms, investment opportunities, Crypto, and others. Creating a portfolio of financial services for everybody. But Financial services is not the only thing NU is working on, they have developed a marketplace in which its customer can purchase from their favorite brands. Partnering with companies like Dafiti and Magalu, Nu has managed to create more value for its customers.
NU does not stop there, the last of its innovations is a social network platform where NU lovers can find exclusive news, financial literacy, and brand experience while discussing with each other and even with company members.
In the first investor call of the year, NU and its CEO David Velez were open about their strategies and upcoming innovations. Velez and his team talked about the new products available and the future expectations for the platform. Money platform is the project NU is working on, trying to create a place where individuals and businesses interact and generate wealth for each other by leveraging its financial decision on AI and optimization processes.
NU is a great opportunity for value investment if you are looking for a tech company. NU is in Latin America but as a digital Bank and Fintech, there are no physical boundaries for the growth of this company. We still don’t know what the limits of this initiative are, Do you think they will make it to the US? Or maybe take over Europe? Let me know what you think in the comments.