Few stocks are as misunderstood as Nu Holdings (NYSE: NU). The digital bank, which focuses on Latin America, is poised to generate substantial profits in the years to come, but it keeps being downgraded by Wall Street due to misinterpretations of its lending business.
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As of last quarter, the company had 135 million customers, most of them in Brazil. Over half of adults in the country have an account with the digital bank, which aims to bring modern banking tools to those whom legacy banks previously disregarded, keeping them out of the financial system.
At the same time, Nu's revenue from existing customers in Brazil is lower than that of the average bank. Management intends to change this by increasing product penetration through services like instant payments, lending, investing, and credit cards.