Nu Holdings (NU): US Roadmap: Competitive market, but with significant upside potential

The United States credit market is 7x larger than Brazil. We take a closer look at the US consumer credit market, where NU has recently launched operations as part of its global strategy. Our analysis implies this move could represent a significant shift in NU's earnings power should it successfully gain traction. While the US banking market is one of the most competitive in the world, it has an addressable consumer lending market of $1.5tn, 7x larger than Brazil. We think NU's ultra-low cost digital approach with a strong consumer experience could allow it to successfully enter the market. We conservatively estimate that every 2% gain in market share in the US could boost earnings by ~$0.5bn and market cap by 16%, with potential upside if it can contain costs. We reiterate our Buy rating and $23 price target, while factoring in some of the initial costs of US expansion but none of the potential upside.