u/1i3to ·
Reddit — r/ValueInvesting
· May 09, 2026 at 16:51
· ⬆ 15 pts
· 💬 35 comments
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AI Summary
Summary
Post compares Nu Holdings (NU) to MercadoLibre (MELI), arguing NU offers a better value due to lower P/E (~24x vs ~47x), higher net margins (18.8% vs 6.9%), and similar hyper-growth (>45% revenue growth).
Author’s thesis: NU’s valuation discount is unwarranted given its superior profitability and expansion into Mexico/Colombia; MELI’s premium is justified by its dual-moat but earnings multiple compression risk exists.
Quality assessment: Well-researched comparative analysis with clear data points (P/E, margins, growth rates, customer counts). Reasonable DD, not speculation.
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▶ Full Post Text
• **Earnings Multiples:** Nu Holdings trades at a significantly lower P/E multiple (\~24x) compared to MercadoLibre (\~47x). Analysts attribute this to MELI's dual-moat in logistics and e-commerce, which typically commands a premium over pure-play fintech.
• **Profitability vs. Expansion:** Nu maintains higher net margins (18.8%) due to its branchless banking model. MELI’s margins (6.9%) are currently compressed by aggressive "wartime" capital allocation into logistics, free shipping subsidies, and credit card expansion in Mexico and Argentina.
• **Growth Trajectories:** Both companies are maintaining hyper-growth status (>45% revenue growth). Nu’s valuation is increasingly supported by its expansion beyond Brazil into Mexico (13M customers) and Colombia (4M customers). MELI’s valuation is bolstered by its Fintech arm (Mercado Pago), which now processes TPV (Total Payment Volume) at roughly 4x its GMV (Gross Merchandise Value).
• **Credit Risk:** MELI’s valuation reflects higher perceived risk in its loan book, which targets subprime/unbanked segments, whereas Nu is perceived to target higher-quality borrowers with longer-term lending products.
MELI’s P/E of 47x is compressed by low margins (6.9%) from aggressive logistics/card spending, but its dual-moat (logistics + e‑commerce) and fintech arm (Mercado Pago TPV 4x GMV) justify a premium. Author implies MELI is fairly priced or slightly overvalued relative to NU, not a clear short but worth monitoring if margin expansion fails. Avoid entering long; watch for margin turnaround or credit deterioration that could create a better entry. Sustained hyper‑growth and moat expansion could drive higher multiples; shipping subsidies may prove profitable long‑term.
NU trades at 24x P/E vs MELI’s 47x, despite NU having 18.8% net margins vs MELI’s 6.9%, and both grow revenue >45%. The valuation gap creates a re‑rating opportunity as NU expands beyond Brazil and proves its credit quality advantage over MELI. Go long NU to capture the multiple expansion and sustained hyper‑growth in LatAm fintech. Economic downturn in Brazil/Mexico; regulatory tightening on fintech; faster‑than‑expected loan losses; MELI’s logistics moat could shift investor preference.