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Some industries are old and lethargic and ripe for innovation.

Banking is definitely one of them.

Banking in Latin America is so underserved that it can’t even really be innovated.

It’s just new!

One company has taken the Latin American fintech market by storm.

Nu Holdings, based in Brazil, started in 2014, and has amassed over 119 million customers.

Important financial metrics for NU:

-Avg. ARPAC grew from $.7 to $25.9 in 8 years, or 57% CAGR!

-Cost to serve the avg customer has gone from $3.80 in Q1 2018 to $.70 in Q1 25 or an 82% drop!

Total users and active users have grown concurrently which demonstrates users are utilizing the platform consistently and not one-time.

90+ NPLs peaked at 7.2% in Q3 24 and are trending towards the 5.5% level from 2018, currently 6.5%.

Emerging markets went through a tough market when the Fed raised rates by a record amount in 2022 and 2023. That impact has now recessed and a weaker dollar should help EM.

ROE of roughly 30% over the past 5 quarters is higher than many banks in the world.

It is not impossible that NU catches the same momentum as HOOD, let’s see!

How is that NVDA has gained ~$2,800,000,000,000 in market cap in roughly 18 months?

Shouldn’t an efficient market have seen a 336% gain coming, such that more of the gains were priced in?

Was there no right tail being priced in?

As we will discuss, many analysts on Wall St. fail to see far enough into the technological future to price these right tails in for many companies.

Contrast NVDA with TSLA which sports a valuation roughly 3.5X valuation of the former.

NVDA has been able to rally sustainably over the past 5 years, nearly 1,375% while TSLA is only up about 300%, or a nearly 4.5X return.

I would posit that these things happen because it is hard for humans to comprehend large scale changes in the world. Artificial intelligence is one of the greatest advancements of recent memory.

The benefit of this dynamic is that many companies can outperform much longer than investors expect.