The stock market has experienced significant volatility over the past month, as investors grapple with tariffs and their possible impact on the broader economy.
Two companies that tariffs may have a lesser impact on are Robinhood Markets(NASDAQ: HOOD) and Nu Holdings(NYSE: NU). These two fintechs are growing at an incredible rate and may be solid buys for long-term investors today.
Image source: Getty Images.
Robinhood is adding customers at a rapid rate
Robinhood has emerged as a key player in the finance industry, especially among a younger demographic. The company, which aims to "democratize finance for all," was one of the first platforms to offer commission-free trading and a user-friendly interface that has drawn millions of investors.
While Robinhood has made investing more appealing for younger generations, it has faced its fair share of scrutiny because of its payment for order flow (PFOF) business model. This business model enables Robinhood to receive compensation from market makers for directing customer trades toward them. Robinhood has faced fines and regulatory action, but has defended this model as a key reason why it can offer commission-free trading.
Following the fallout from the meme-stock frenzy a few years ago, and subsequent regulatory scrutiny, Robinhood's growth slowed, and its customer assets plateaued at one point.
Things are looking up for Robinhood lately. The company has done an excellent job revamping its platform, attracting customers and deposits, and enhancing its offerings. At the end of the first quarter, Robinhood had 25.8 million funded customers. It also boasts over $221 billion in assets on its platform, up 70% from one year ago and up 16% from the fourth quarter.
Image source: Robinhood Markets.
Robinhood has drawn customers to its platform with its high-yielding accounts. It currently offers a 4% annual percentage yield (APY) on uninvested cash for its Robinhood Gold members. Robinhood Gold is a subscription service that costs $5 per month and gives Robinhood a steady revenue stream. In addition, Gold members are likely to have more assets and are more likely to use Robinhood's retirement account services.
Robinhood has done an excellent job attracting customers to its platform with retirement accounts and appealing interest rates, and is also introducing prediction markets, which have grown in popularity in recent years.
Nu Holdings is expanding across Latin America
Nu Holdings, Nubank's parent company, is a fast-growing fintech expanding its footprint across Latin America. Nu started in Brazil, taking on a banking oligopoly that resulted in exorbitant fees while leaving much of the country's population unbanked.
Nu's digital-only neobank model keeps overhead costs low and allows it to offer free checking accounts and reasonable interest rates on credit cards and other loans.
Since its inception in 2016, Nu's Brazilian customer base has exploded, and today the bank counts 101.8 Brazilians, or roughly 58% of Brazil's adult population, among its customers. With such stellar growth in Brazil, Nu has set its sights on two more major markets in Latin America: Mexico and Colombia.
In Colombia, Nu's customer count has tripled to nearly 2.5 million over the past year. Meanwhile, in Mexico, Nu's customer count has doubled to 10 million, and further growth could be on the way. That's because Nu recently secured regulatory approval from the Mexican National Banking and Securities Commission to transition into a full-service bank.
Nu has operated as a Popular Financial Society (SOFIPO) institution, which allows it to offer basic financial services such as deposit accounts, credit cards, and personal loans. However, as a SOFIPO, Nu faces geographic limitations, reduced deposit insurance, lower deposit limits, and limited investment options, stifling its ability to expand geographically and offer more products.
Nu's growth is undeniable. The company continues to expand revenue and has posted several positive earnings quarters in a row as it expands beyond Brazil and across Latin America. With the recent boost to its expansion in Mexico, Nu is positioned to continue building on its remarkable growth.
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