São Paulo – Nu Holdings Ltd. (NYSE: NU) saw its shares advance 1.7% last week, but that performance lagged behind three comparable regional fintech companies that posted gains between 4.2% and 5.7%. The slower move comes as investors weigh the company's aggressive credit expansion against tightening risk-adjusted returns.
In the first quarter, Nu's credit portfolio grew 40% on a currency-neutral basis, while deposits rose 22%. However, the risk-adjusted net interest margin (NIM) contracted by 100 basis points, signaling that the cost of risk is eating into profitability. The loan-to-deposit ratio jumped to 58.3% from 49.1% in the fourth quarter of 2025, indicating that lending is outpacing deposit growth by a significant margin.
Early delinquency metrics are also under scrutiny. The 15-90 day non-performing loan (NPL) ratio climbed to 5.0%, up 89 basis points from the previous quarter, while the 90+ day NPL ratio improved slightly to 6.5%, down 10 basis points. Despite a headline NIM of 21.1%, the risk-adjusted NIM fell to 9.5% from 10.5% in Q4 2025, reflecting higher provisioning needs.
Shares of Nu closed Friday at $14.33, down 1.1% for the session, with trading volume at 47.6 million shares—roughly 66% of the 65-day average. This relatively light activity suggests the recent underperformance may not signal a definitive trend reversal, but it does highlight investor caution.
The valuation gap remains a key point of contention. Nu trades at 22.1 times trailing earnings, compared with PagSeguro Digital Ltd.'s 7.2 times and StoneCo Ltd.'s 4.6 times. MercadoLibre Inc. is pricier at 49.6 times, but the peer group's business models vary significantly. Nu's premium is justified by its growth and profitability—first-quarter net income reached $871 million, with a return on equity of 29%—but higher expectations mean any misstep could be punished.
CEO David Vélez has emphasized that Nu can increase credit limits “with resilience, not just speed.” The upcoming second-quarter earnings report, scheduled for August 13 after U.S. market close, will be a critical test of whether the company can balance growth with credit quality. The earnings call is set for 6 p.m. EDT.
Analysts are cautiously optimistic. The consensus rating is Overweight, with 17 Buy ratings, 3 Holds, 1 Underweight, and 1 Sell. The median price target stands at $18.00, implying a potential upside of 25.6% from Friday's close, though targets range from $10 to $22. Preliminary consensus for Q2 EPS is $0.20, slightly below the $0.21 recorded a month earlier and well above the $0.14 forecast for Q2 2025. For fiscal 2026, the consensus EPS estimate is $0.84, down from $0.87 three months prior.
Nu will hold its annual shareholder meeting on Thursday, August 6, with votes on 2025 accounts and the re-election of nine directors. The main catalyst, however, is the earnings release.
Risks remain elevated. Persistent early delinquencies could keep loss provisions high and weigh on risk-adjusted margins. Additionally, planned U.S. investments may delay efficiency improvements. With customer numbers already at scale, the next phase of the stock's rerating will depend on improved credit conversion rather than further user growth.
