It’s natural for them to compete, but I believe the market opportunity is so vast that both can succeed while the real losers will be the incumbent banks.
Absolutely. However, in the long term, I think the fact that MELI has its fintech services integrated with its delivery platform is a tailwind to them.
The best analysis on Nu out there! However, I disagree on 2 things:
1. "new disclosure highlighted that fees and float are now meaningful contributors to gross profit" - Fees and Float were always meaningful contributors, credit is new within the mix.
2. "not as cheap as it was" - on forward earnings Nu is now the cheapest ever, compared to its listed history.
Thanks for reading, and for the positive feedback and comments:
1. This was a new disclosure, they had not previously broken out gross profit by fees, float, and credit in the presentation. I wasn’t suggesting that fees and float weren’t meaningful before, only that the disclosure itself is new.
2. I don’t use NTM P/E to value a business like Nu, which isn’t yet optimised for profitability. Just a couple of months ago, the stock was trading below $10, and nothing fundamental has changed since then. At that time, I shared a fair value analysis, here’s the link: https://www.thewolfofharcourtstreet.com/p/nu-holdings-2025-financial-model
What is your assessment for prospects for gross margin moving forward - do you expect it to stabilize or even improve moving forward - did management provide any guidance in that regard?
Thanks for the feedback. In this quarter, we know gross margin was artificially lower due to the accounting treatment of the credit model upgrades in Brazil, which front-loaded provisions. All else being equal, I’d expect gross margin to be slightly higher or at least flat in Q3.
Looking longer term, however, I expect incremental gross margins to trend lower as Mexico and Colombia become a larger share of the overall business. What really matters for investors is gross profit dollars. There’s little value in keeping margins high if it comes at the expense of overall profit growth.
How do you think MELI and NU will compete?
It’s natural for them to compete, but I believe the market opportunity is so vast that both can succeed while the real losers will be the incumbent banks.
Absolutely. However, in the long term, I think the fact that MELI has its fintech services integrated with its delivery platform is a tailwind to them.
The best analysis on Nu out there! However, I disagree on 2 things:
1. "new disclosure highlighted that fees and float are now meaningful contributors to gross profit" - Fees and Float were always meaningful contributors, credit is new within the mix.
2. "not as cheap as it was" - on forward earnings Nu is now the cheapest ever, compared to its listed history.
Thanks for reading, and for the positive feedback and comments:
1. This was a new disclosure, they had not previously broken out gross profit by fees, float, and credit in the presentation. I wasn’t suggesting that fees and float weren’t meaningful before, only that the disclosure itself is new.
2. I don’t use NTM P/E to value a business like Nu, which isn’t yet optimised for profitability. Just a couple of months ago, the stock was trading below $10, and nothing fundamental has changed since then. At that time, I shared a fair value analysis, here’s the link: https://www.thewolfofharcourtstreet.com/p/nu-holdings-2025-financial-model
Great report - thank you!
What is your assessment for prospects for gross margin moving forward - do you expect it to stabilize or even improve moving forward - did management provide any guidance in that regard?
Thanks. again.
Thanks for the feedback. In this quarter, we know gross margin was artificially lower due to the accounting treatment of the credit model upgrades in Brazil, which front-loaded provisions. All else being equal, I’d expect gross margin to be slightly higher or at least flat in Q3.
Looking longer term, however, I expect incremental gross margins to trend lower as Mexico and Colombia become a larger share of the overall business. What really matters for investors is gross profit dollars. There’s little value in keeping margins high if it comes at the expense of overall profit growth.
Great content! Keep posting.
Thank you for the feedback, much appreciated
One of my infamous recognised the company early, recognised the potential and quality, recognised it wasn't massively overvalued.
Didn't buy it.
We’ve all been there, I’ve got plenty of examples on my end. I still don’t think it’s expensive but obviously not as cheap as it was.