A Purple Card in a Big Country

A Purple Card in a Big Country

Nubank ended 2025 with 131 million customers, $16.3 billion in annual revenue, and $895 million in net income for the fourth quarter alone. The company serves roughly one in every three adults in Brazil and has expanded into Mexico and Colombia with growth rates that outpace what it achieved in Brazil at similar stages. The market values the business at roughly $73 billion.

Those are remarkable numbers for a company that did not exist twelve years ago. The question, as always, is what the numbers mean going forward and whether the price reflects what is already known or what is yet to come.

The Economics of Serving the Underbanked

The traditional banking system in Latin America has been, for lack of a better word, terrible for ordinary consumers. High fees, poor service, limited access, and a general attitude that small depositors are a nuisance rather than a customer. Nubank built its business by treating these people as customers worth serving.

The cost structure tells the story. Nubank spends roughly $0.80 per account per month to serve a customer. Traditional banks in Brazil spend several multiples of that. When your cost to serve is that low, you can profitably bank customers that incumbents ignore. And when you do it well, those customers give you more of their financial life over time.

Average revenue per active customer hit $15 in Q4 2025, up from $11.10 a year earlier and $5 in 2021. That is a 30% compound annual growth rate in revenue per customer, and the long-term figure for mature customers is closer to $30. The company has 131 million customers, 83% of whom are active. Multiply 109 million active customers by a potential ARPAC of $30, and the revenue runway becomes clear.

Return on equity reached 33% in Q4. For a bank of any kind, that is an excellent number. For a digital bank still in growth mode, it is extraordinary.

Mexico and Colombia

Nubank passed 15 million customers in Mexico by April 2026, making it one of the three largest financial institutions in the country by user count. That is a 36% increase year over year. The company plans to invest $2.5 billion in Mexico by 2030, with total investments expected to reach $4.2 billion. It received authorization to operate as a full bank in Mexico in April 2025 and expects to launch full banking operations this year.

In Colombia, the customer base reached 4 million by the end of 2025, representing roughly one in ten adults. Growth in both countries is running faster than Brazil at comparable stages.

These markets matter because they extend the same playbook that worked in Brazil: low-cost digital delivery, a product that is genuinely better than what incumbents offer, and a large population of underserved consumers. Mexico alone has more than 130 million people. Colombia has 50 million. The addressable market across Latin America is enormous.

The US Gambit

In January 2026, Nubank received conditional approval for a US national bank charter. The company plans to capitalize the institution within 12 months and begin banking operations within 18 months, with co-founder Cristina Junqueira leading the effort from Miami.

This is the most speculative part of the story. The United States is not Latin America. The banking market is competitive, well-served by existing digital players like SoFi and Chime, and regulated in ways that make a Brazilian cost advantage harder to replicate. Acquiring customers in the US will cost more, and the revenue per customer may take longer to develop.

I would not assign much value to the US expansion today. If it works, it is a bonus. If it does not, the Latin American business provides more than enough runway for the next decade. The important thing is that management is not betting the company on it. The investment appears measured, and the timeline is long.

What Could Go Wrong

The obvious risks are worth listing plainly.

Credit quality is always a concern for a bank that lends to lower-income consumers. Nubank's net income margin of about 18% provides a buffer, and the company has been disciplined about provisioning, but a severe recession in Brazil would test that discipline. Brazil's economy has a habit of testing financial institutions more often than investors would prefer.

Currency risk is real. Nubank reports in US dollars but earns mostly in Brazilian reais. A weakening real reduces reported revenue and earnings even when the underlying business performs well. This is a permanent feature, not a temporary headwind.

Competition is increasing. Brazilian incumbents are investing in digital, and other fintechs are growing. Nubank's lead is large, but not every advantage is permanent.

And the valuation itself is a risk. At $73 billion, the market is pricing substantial growth. The stock trades at roughly 20 times annualized Q4 net income. If growth slows or credit losses spike, the multiple would contract quickly.

Where I Come Out

Nubank is a genuinely good business. The unit economics are strong, the customer growth is real, the expansion markets are large, and the management team has executed well for over a decade.

At $73 billion, you are paying a growth-company price for a financial institution. That combination can work beautifully when growth continues, and it can be painful when it stalls. The 33% ROE and 45% revenue growth provide support, but the valuation leaves limited room for disappointment.

I would be comfortable buying a small position here and adding on weakness. The Latin American opportunity is large enough and early enough that patient owners should be rewarded over a five-to-ten-year horizon. But I would keep the position sized modestly, because banking and emerging markets can both deliver unpleasant surprises, sometimes simultaneously.

The best businesses are not always the best investments. Price still matters, even when the business is this good.