Key Takeaways
- XP shares jumped about 33% as US-listed Brazilian stocks rallied after Flávio Bolsonaro led the first round of Brazil’s presidential election.
- XP outran the big banks because it earns its fees when Brazilians invest, and a reform agenda could bring interest rates down and push savers toward stocks.
- XP’s revenue grew every year from 2021 to 2025, by about 50% in all.
- The Oct. 25 runoff is the risk, and the jump has already lifted XP’s forward P/E from 9.5 to something much closer to its five-year average of 13.
XP (XP) shares jumped about 33% on Monday, as US-listed Brazilian stocks rallied on Sunday’s presidential election.
Right-wing senator Flávio Bolsonaro took 47% of the vote, beating polls that had Lula in the lead. He’ll now face President Luiz Inácio Lula da Silva, who got about 45%, in a runoff on Oct. 25.
Pedro Galdi, an investment analyst at the AGF Investments platform, put the mood plainly to Reuters:
“The market wants change, it wants reform, it doesn’t want a high public deficit; with the current government, all of this will continue.”
XP had plenty of company – but the broker beats the banks
The iShares MSCI Brazil ETF (EWZ) is up about 13%, and Brazil’s other US-listed financials rallied right alongside XP, like Nu Holdings (NU), which is also up about 13%.
XP led them all, though, and that makes sense to me.
Bolsonaro is the market’s candidate because he’s promising more fiscal discipline. In a reform scenario, as JPMorgan told clients, interest rates could fall to their neutral level, 10% in nominal terms. Brazil’s benchmark Selic rate is at 14% today.
That gap matters to XP, which makes its money when Brazilians invest. At 14%, savers earn a hefty return without ever touching a stock. Lower rates push that money toward stocks and investment funds, which is exactly where XP earns its fees. (And if only US inflation would cool to allow the same thing to happen here!)
And XP’s top line has grown every year since 2021, by about 50% in all…
The runoff is the risk
Of course, nothing is settled until Oct. 25, and much of XP’s discount has already closed. Brazilian stocks had climbed with Bolsonaro’s polls for months, and XP went from 6.9 times forward earnings in June to 9.5 times at Friday’s close. At today’s price, it’s even higher.
My take: XP is the cleanest bet on Brazilians moving their savings into stocks, so it earned the group’s biggest move. A Bolsonaro win would give it room to run toward that average.
Brazil has been here before, though. Four years ago, the Bovespa jumped 5.5% the day after Jair Bolsonaro’s stronger-than-expected first round, and he went on to lose the runoff to Lula.
So what is XP stock actually worth?
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Disclaimer:
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