Can Nubank Repeat Its Brazilian Success in Mexico and Beyond?

The rapid expansion of Nu Holdings Ltd. NU in Brazil has set a high bar, but replicating that momentum in Mexico may prove more complex. Although Nubank Mexico launched with a more aggressive rollout than its Brazilian counterpart, growth metrics suggest a slower trajectory. When Nubank reached 10 million users in Brazil, it was growing at a robust 20% quarter over quarter. In contrast, Nubank Mexico is currently expanding at a more modest 10% quarterly pace, implying a timeline of nearly two years to double its customer base, compared to just one year in Brazil.

However, regulatory tailwinds might change the equation. New banking licenses in Mexico could unlock access to payroll loans, currently dominated by a few legacy banks, and enable Nubank to offer deposit insurance. These advancements would not only diversify Nubank's revenue streams but also strengthen consumer trust, a crucial factor in financial services adoption.

Yet the road ahead is still rocky. Mexican incumbents have had a front-row seat to Nubank’s disruptive rise in Brazil. This has given them ample time to fortify their defenses, upgrade digital offerings and safeguard their customer base. Unlike in Brazil, where traditional banks were caught off guard, Mexican institutions are preemptively countering Nubank’s market entry, likely slowing its path to dominance.

In summary, while Mexico presents promising regulatory and market potential, Nubank may struggle to recreate the explosive growth it experienced in Brazil. Future success will depend on both strategic execution and the ability to navigate entrenched competition in newer markets.

Peer Pressure?

While NU continues to surge ahead in Latin America, U.S.-based peers like SoFi Technologies SOFI and Block XYZ are taking different routes to growth.

SoFi is focusing on deepening customer relationships through bundled financial services like lending, investing and banking. Its strategy seems to emphasize lifetime value over rapid user expansion. Meanwhile, Block is sharpening its dual ecosystem approach, serving both individual users through Cash App and small businesses via Square.

While both SoFi and Block are evolving steadily, NU’s pace and scale of customer acquisition in emerging markets underscore a distinct momentum that sets it apart in the global fintech landscape.

NU’s Price Performance, Valuation & Estimates

The stock has rallied 18% year to date, underperforming the industry’s 22% growth.

From a valuation standpoint, NU trades at a forward price-to-earnings ratio of 18.88, well above the industry’s 9.2. It carries a Value Score of D.

The Zacks Consensus Estimate for NU’s second-quarter 2025 earnings has been on the decline over the past 60 days.

NU stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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