Shares of Nu Holdings Ltd., the parent company of digital bank Nubank, experienced a significant sell-off on Thursday, dropping approximately 8% to $15.31. The decline came despite the fintech firm announcing record quarterly revenue and a substantial jump in net income for the fourth quarter.
Strong Headline Numbers Overshadowed by Concerns
For the quarter ended December 31, 2025, Nu reported net income of $895 million, a notable increase year-over-year. Revenue reached $4.9 billion, marking a new high for the company. The customer base continued its expansion, ending the period with 131 million users. A key profitability metric, return on equity, stood at a robust 33%.
Operational metrics showed an average monthly revenue per active customer (ARPAC) of $15, while the cost to serve each active customer remained low at around $0.80 per month. The company's credit portfolio grew to $32.7 billion, with a risk-adjusted net interest margin of 10.5%. However, the 90-day-plus non-performing loan (NPL) ratio was reported at 6.6%, a figure that drew investor attention.
Analysts Flag Cost and Tax Pressures
While the headline figures were strong, analyst commentary following the release zeroed in on emerging pressures. JPMorgan analysts noted the company benefited from a lower-than-expected tax rate during the quarter, a tailwind that may not persist. Analysts at Citigroup pointed to rising costs of risk and operating expenses, stating these factors "mud the picture" for the otherwise profitable quarter.
CFO Guilherme Lago attributed the profit growth to the expanding customer base, higher revenue per user, and stable servicing costs. "This brings positive leverage to revenue," Lago stated in an interview. Nonetheless, the market's reaction suggests investors are looking beyond the top-line growth and scrutinizing the quality and sustainability of earnings.
Market Context and Sensitivity
Nu Holdings has become a bellwether for Latin American fintech stocks, with its performance closely watched as an indicator for the sector. The company's core business remains centered on credit cards, making its financials particularly sensitive to shifts in consumer credit behavior. Minor changes in delinquency rates can significantly impact provisions for loan losses and, consequently, net income.
The sell-off accelerated in post-market trading Wednesday, with shares falling an additional 5.5% after the regular session. The stock experienced volatility throughout the trading day on Thursday. On the earnings call, CEO David Velez acknowledged the challenging competitive landscape in the U.S. banking market, even as Nu continues to advance its entry plans there.
Looking Ahead: The May Catalyst
Investor focus is now shifting to the company's next earnings report, scheduled for May 14. That update and the subsequent investor call are expected to provide critical insights into whether the cost pressures are transient or a new trend. Key areas for scrutiny will be the trajectory of credit losses, the pace of operating expense growth, and how effectively the business is scaling.
The central risk for Nu is that as its loan portfolio expands, credit losses could climb more quickly than anticipated. Alternatively, operating costs could outpace revenue growth, undermining the "operating leverage" argument that supports its current valuation. The company has also taken steps to adjust its financial disclosures, issuing an independent limited assurance report for a new "Managerial P&L" reconciliation process intended to improve comparability as it grows.
This quarter's market reaction underscores that for high-growth fintech names like Nu, investor patience can be thin when perceived risks—whether from taxes, operating costs, or credit quality—come to the forefront, even against a backdrop of strong user and revenue growth.
