Nu Holdings Ltd. (NU) saw a modest uptick in its stock price on Wednesday, closing at $13.03, a gain of 0.4%, as investors weighed the company's latest expansion plans in Colombia against persistent concerns over credit quality and rising expenses. The stock traded in a narrow range between $12.94 and $13.18 during the session, with nearly 48 million shares changing hands on the New York Stock Exchange.
The Brazilian digital banking giant, operating under the Nubank brand, announced that its Colombian unit now serves 5 million customers and plans to invest approximately $130 million in the country in 2026. This move underscores Nubank's strategy to replicate its low-cost, technology-driven banking model beyond its home market, targeting growth in Latin America's underbanked populations.
Despite the positive news, Nu's shares remain under pressure, down more than 22% year-to-date. The stock is trading well below its 52-week high of $18.98, reflecting investor caution over the company's credit loss allowance, which surged 33% in the latest quarter to $1.79 billion. The risk-adjusted net interest margin also contracted to 9.5% from 10.5% in the prior period, signaling tighter spreads and potential headwinds to profitability.
Nubank's Colombia push comes as part of a broader regional expansion. The company now boasts over 135 million customers across its markets, with more than 115 million in Brazil, 15 million in Mexico, and close to 5 million in Colombia. In the most recent quarter, Nu surpassed $5 billion in quarterly revenue for the first time, posting net income of $871 million and a return on equity of 29%. However, analysts remain cautious, with UBS maintaining a Buy rating but trimming its price target to $16.90 from $18.10, and BofA cutting its target to $16 from $17 with a Neutral stance, citing weak quarterly earnings.
CEO David Vélez has been emphasizing the role of artificial intelligence in the company's strategy, stating on the earnings call that Nu is "rebuilding banking around AI." The company already deploys AI models for credit card calls in Brazil and Mexico and for unsecured loans in Brazil. Yet, rising credit costs and the potential for early delinquencies to exceed seasonal norms could shift market focus away from customer growth to margin compression.
Peer performance was mixed, with Brazil's PagSeguro rising 0.7% and U.S.-based SoFi gaining 1.2%, while the broader S&P 500 and Nasdaq 100 ETFs were nearly flat. Nu's gain appeared driven by company-specific developments rather than sector momentum, as the iShares MSCI Brazil ETF dropped 1.0% on the day.
Looking ahead, the key question for investors is whether Nubank can sustain user growth in Colombia and Mexico while maintaining credit discipline in Brazil. With increasing spending on AI, U.S. pilot programs, and Latin American expansion, any misstep in underwriting or cost control could amplify market skepticism. For now, Nu's valuation reflects cautious optimism, with the market acknowledging its scale but demanding proof of sustainable profitability beyond its home market.
