Sam Badawi
The Bull Case for NuBank | Hidden Edge Live on FutureInvesting
2/6/2025, 8:05:23 AM
Economic Summary
- Brazil has sharply rising inflation with the central bank hiking rates to ~13.25% and projections toward 15%, tightening liquidity and raising systemic risk for local borrowers and banks.
- USD/BRL strength materially affects Brazil-revenue companies like Nubank (NU) because FX translation and capital flows increase volatility and can trigger outsized share moves.
- Shift from cash to digital payments (PIX) and fintech adoption in Latin America benefits digital-first banks and super-app strategies, improving unit economics and reducing branch overhead.
- Geopolitical/structural shifts such as BRICS/de-dollarization talk and U.S. political alignment can materially influence sentiment toward Brazilian assets.
Bullish
- Large market share and rapid user growth across Brazil, Mexico, Colombia.
- Expanding product suite (cards, payroll loans, eSIMs, institutional products) increases revenue per customer.
- Digital payments and PIX adoption favor fintechs over legacy banks.
Bearish
- High exposure to Brazil makes the company vulnerable to FX swings and local macro shocks.
- Rising non-performing loans (90+ days) trend could pressure credit performance and investor confidence.
- Tightening Brazilian monetary policy and USD strength can force risk-off selling of growth stocks.
Bullish tickers
NUMELISOFI
Bearish tickers
NUMELI
NU
5 price targets
1617192025
Bullish
Rapid user and market-share growth, rising revenue-per-user, expanding NIMs and FCF margins, product expansion across LatAm and potential U.S. entry.
Bearish
Concentrated revenue in Brazil (>80–90%), rising 90+ day NPLs, and sensitivity to USD/BRL and Brazilian rate hikes.
MELI
Bullish
Large e-commerce presence in Latin America benefits from digital adoption and payments growth.
Bearish
Exposed to LatAm FX and risk-off flows that pressured share price alongside broader regional selloffs.
SOFI
Bullish
Tech-first fintech model shows advantages in affluent or digitally native segments.
Bearish
May not specifically reach niche Latin American unbanked demographic quickly.
PYPL
Bullish
Established payments infrastructure could be a partner model for fintech market entry.
Bearish
Competitive fintech landscape could limit standalone expansion into specific immigrant niches.
JPM
Bullish
Scale and digital transition allow cost reductions versus physical banking overhead.
Bearish
Legacy brick-and-mortar costs and branch closures reflect restructuring challenges.
INTER & CO.
Bullish
Marketing and local promotion (e.g., Miami) indicates intent to capture diaspora customers.
Bearish
Unclear brand/market overlap in U.S. expansion; regulatory and scaling challenges in new markets.
People mentioned
Sam SolidDavid VelezJerome PowellDonald TrumpMattPresident Luna