Nubank (NU) Financial Analysis: Strong Growth Amid Berkshire Hathaway Exit and Mexico Expansion

Nubank's Market Resilience Amid Strategic Shifts#

Nubank (NYSE: NU has shown remarkable market strength with its stock price rising to $13.73, reflecting a +1.37% increase intraday. This gain comes on the heels of Berkshire Hathaway’s complete divestment from the company, a move that might have unsettled lesser firms but has instead underscored Nubank’s robust fundamentals and growth prospects in Latin America's fintech space. The timing of this exit is notable as it coincides with Nubank’s aggressive expansion in Mexico through a newly acquired banking license, signaling a pivotal phase in the company's regional strategy.

Financial Performance: Accelerated Revenue and Profit Expansion#

Nubank’s financial trajectory over the past three years paints a picture of rapid scaling and improving profitability. The company’s revenue soared from $1.51 billion in 2021 to an impressive $11.1 billion in 2024, representing a compounded annual growth rate (CAGR) of approximately 94.36% over three years. This growth rate significantly outpaces many regional competitors and highlights Nubank’s effective market penetration and product diversification.

Net income, which was negative in 2021 (-$164.99 million), turned positive and surged to $1.97 billion in 2024, reflecting an extraordinary +91.37% year-over-year increase. The net income margin improved from a loss of -10.91% in 2021 to a healthy 17.76% in 2024, indicating enhanced operational efficiency and improved unit economics. This profitability turnaround is supported by a solid operating income ratio of 25.17% and a gross profit margin close to 46% in 2024, underscoring strong cost management despite rapid growth.

Key Financial Metrics Overview#

The cash flow profile also reflects strengthening financial health. Nubank generated $2.4 billion in net cash from operations in 2024, nearly doubling the prior year’s figure, with free cash flow reaching $2.22 billion, enabling the company to invest selectively in capital expenditures (around $175 million) while maintaining a net cash position exceeding $9 billion at year-end. This financial flexibility is critical as Nubank pursues further geographic and product expansion.

Strategic Expansion: Mexico Banking License and Regional Growth#

A standout development for Nubank in 2025 is the acquisition of a banking license in Mexico, a market with significant financial inclusion opportunities due to a large underbanked population. This license empowers Nubank to broaden its product offerings beyond credit cards and digital wallets to include savings accounts, loans, and full banking services. This move is expected to deepen customer engagement and diversify revenue streams, crucial for sustaining long-term growth.

The Mexican expansion complements Nubank’s dominant position in Brazil, which remains its largest market by customer base and revenue contribution. Nubank’s customer base has expanded to over 110 million users across Latin America, including Brazil, Mexico, and Colombia, illustrating the company’s scale and regional influence.

Berkshire Hathaway Exit: Market Impact and Strategic Implications#

Berkshire Hathaway’s divestment from Nubank during Q1 2025 attracted significant attention. However, this move aligns with Warren Buffett’s broader portfolio rebalancing strategy, which favors U.S. Treasury bonds and reduced exposure to the financial sector rather than reflecting any fundamental concerns about Nubank’s business model or prospects. Despite the exit, Nubank’s share price has appreciated by 24% year-to-date in 2025, demonstrating strong investor confidence and market resilience.

Valuation and Analyst Outlook#

Nubank currently trades at a price-to-earnings (PE) ratio of approximately 31.19x, reflecting a premium valuation consistent with its high-growth fintech status. Forward-looking PE estimates show a downward trajectory, with analysts projecting ratios of 24.17x in 2025 and 9.29x by 2028, signaling expectations of earnings growth and margin expansion.

Revenue forecasts suggest Nubank’s top line could reach $12.5 billion in 2025, growing at a compound annual growth rate (CAGR) of around 25.5% in the near term. Earnings per share (EPS) estimates also show positive growth, with 2025 EPS projected at approximately $0.56, rising to $1.45 by 2028.

Competitive Landscape and Industry Trends#

Nubank operates in a rapidly evolving fintech ecosystem where digital banking adoption is accelerating across Latin America. Its strategy of leveraging technology to reduce costs and enhance user experience has given it a competitive edge over legacy banks, which often struggle with outdated infrastructure and regulatory complexities.

The company's low debt-to-equity ratio (~0.1x) and net cash position strengthen its financial flexibility, enabling ongoing investments in innovation and market expansion without the burden of significant leverage. Nubank’s return on equity (ROE) at 27.91% and return on invested capital (ROIC) of 17.44% highlight its efficient capital deployment relative to peers.

What This Means For Investors#

Nubank’s strong financial performance, strategic geographic expansion—especially with the Mexican banking license—and operational efficiency position it well for sustained growth in the Latin American fintech sector. The Berkshire Hathaway exit, while notable, appears to be a portfolio strategy unrelated to Nubank’s fundamentals, and the market’s positive reaction reflects confidence in Nubank’s business model and prospects.

Investors should monitor upcoming earnings announcements and progress in Mexico, as these will be critical indicators of Nubank’s ability to capitalize on new market opportunities and maintain its growth trajectory.

Key Takeaways#

1. Robust Revenue Growth: Nubank’s revenue increased from $1.51B in 2021 to $11.1B in 2024, showing exceptional expansion.
2. Profitability Turnaround: Net income swung from a loss to nearly $2B with improving margins.
3. Strategic Mexico Expansion: New banking license unlocks significant revenue and customer growth potential.
4. Berkshire Hathaway Exit: Market remains confident; exit linked to Berkshire’s broader strategy, not Nubank’s fundamentals.
5. Strong Financial Health: High cash reserves and low leverage support ongoing investments.
6. Valuation Reflects Growth: Premium valuation with forward PE ratios indicating expected earnings growth.

References#

• Nu Holdings Q1 2025 Financial Results Summary
• Berkshire Hathaway Divestment Rationale
• Mexico Expansion Impact
• Analyst Growth Outlook
• Berkshire Hathaway's Strategy and Exit