Time to Buy the Dip on Nu Stock?

The market’s having a wild ride so far in 2025, and the S&P 500 briefly entered correction territory last week before swinging back up. For new investors, it could be a scary time. But seasoned investors know that not only is this par for the course, there’s a silver lining: You can find excellent stocks at terrific prices.

Now Holdings (NYSE: NOW) has underperformed the market during the past year, up less than 1% while the S&P 500 is up 10%. However, it’s starting to bounce back. Is now the time to buy?

Nu provides digital banking and financial services in Brazil, Mexico, and Colombia. It has carved out a niche by opening in a region with significant entry barriers for banking customers, and members are drawn to Nu’s ease of use. It reports consistent solid quarterly growth, and the regions where it operates still have little digital financial access, giving it a healthy runway.

In the 2024 fourth quarter, revenue increased 50% year over year currency neutral, and net income rose from $360.9 million to $552.6 million. Cost to serve remained stable quarter over quarter at $0.80 per customer, which was a decrease from $0.90 the year before.

Nu was originally created to meet the needs of a mass population that wasn’t able to access Brazil’s highly regulated and expensive banking system, but it’s catching on with anyone who is looking for a better banking experience. Although it already has 58% of the adult population of Brazil as customers, it continues to add 1 million new members monthly, and 61% of its monthly actives use Nu as their primary banking account. Nu is now the third-largest bank in Brazil in terms of members, but there’s so much more growth to capture in Brazil. For example, Ultravioleta customers, its affluent consumer service, increased 132% year over year, but the number is still small at 688,000.

Nu’s has just a modest presence in Mexico and Colombia, where it launched after Brazil and it still doesn’t have full operations. It rolled out a high-rate savings account in these two markets that’s attracting new members, and growth is faster there than in Brazil. It ended 2024 with 10 million customers in Mexico, a 91% year-over-year increase, or 12% of the adult population. Down the line, there are many other adjacent countries Nu can enter that don’t have optimal fintech solutions.

Now is A Warren Buffett stockalthough it doesn’t quite fit the classic Buffett mold, since it’s a young growth stock. He does love bank stocks, but there’s something else notable about Nu that Buffett has mentioned several times that’s crucial in a great business: A high return on equity (ROE). Nu’s low-overhead model yields high profits, and Nu’s ROE was 28% in 2024, placing it in the top tier of financial institutions worldwide.