Nu Holdings Ltd. (NU): A Bull Case Theory

We came across a bullish thesis on Nu Holdings Ltd. on PatchTogether Investing’s Substack. In this article, we will summarize the bulls’ thesis on NU. Nu Holdings Ltd.'s share was trading at $15.78 as of September 26th. NU’s trailing and forward P/E were 33.60 and 19.38, respectively according to Yahoo Finance.

Nubank (NU) presents a compelling long-term growth opportunity driven by its under-monetized user base and substantial ARPAC upside. Currently, the bank serves 122.7 million users with a weighted-average ARPAC of $12.2, while mature cohorts already generate $27–$28 per month, and incumbents command ~$45. Management expects ARPAC to rise steadily toward incumbent levels while maintaining a low $1 cost to serve, creating significant operating leverage as cohorts mature. Even under an ultra-conservative scenario—assuming flat users for the next five years, ARPAC rising to only $20, and a 20% net margin—Nubank’s revenue would reach $29.45 billion, translating to $5.89 billion in net income.

Applying simple P/E multiples suggests a year-five market cap between $88 billion and $147 billion, implying 31%–119% upside from today’s $67.2 billion valuation, or roughly 5.6%–17% annualized growth. This analysis excludes potential upside from user expansion, cross-sell opportunities, margin improvement, or international growth. Modest assumptions of 5% user CAGR lift revenue to $37.6 billion and net income to $7.5 billion, implying a $150 billion market cap and ~17.5% annualized return. Risks include higher credit costs from macroeconomic shocks, ARPAC compression from mass-market pricing pressure, FX translation exposure, and execution challenges in scaling credit and payroll products.

Offsetting these risks, ARPAC could exceed $20 through deeper adoption across credit, transactional services, insurance, and investments, while net margins could improve with normalized credit costs and efficiency gains. Even with conservative assumptions, Nubank’s combination of under-penetrated users, strong ARPAC growth potential, and low operating costs positions the stock for meaningful upside, making it a highly attractive investment case over the medium term.

Previously we covered a bullish thesis on Nu Holdings Ltd. (NU) by Ray Myers in May 2025, which highlighted strong revenue and customer growth, high net income margins, and upside from underpenetrated financial services in Latin America. The stock has appreciated ~20% since coverage. The thesis still stands as Nu’s scale-driven model supports growth. PatchTogether Investing shares a similar view but emphasizes ARPAC upside and long-term valuation scenarios.

Nu Holdings Ltd. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 97 hedge fund portfolios held NU at the end of the second quarter which was 80 in the previous quarter. While we acknowledge the potential of NU as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.