Verdict: Overreaction

Key finding: XP is being sold as the purest bet on the Brazil election, and that bet failed. But the premarket print of $15.16 (-50.1%) is 29.5% below the 10/2 close ($21.50), when Lula was leading the polls before the first round. That price is back inside the stock's May-August 2026 base (lows 14.80-16.25) at about 7-8x trailing earnings. No company-specific bad news came out over the weekend. Q2 showed net income +5% and net inflow of R$28bn (vs R$10bn a year earlier), and a R$1bn buyback is open.

What XP does

Scorecard

Ticker Rev last Q ($M) Rev YoY last Q Rev YoY prior Q Gross margin (last Q, trend) Op margin EPS last Q vs yr ago P/S Mkt cap 1-mo price %
XP R$4,995 +14.0% +6.9% 66.4% (up from 65.8%) 32.6% R$2.74 vs R$2.46 4.06 $15.8B +48.3%
INTR R$4,583 +33.7% +39.0% 40.7% (up from 39.6%) 11.4% R$0.98 vs R$0.71 0.94 $3.2B +40.7%
NU $5,520 (USD) +49.9% +53.4% 45.3% (up from 40.2%) 22.4% $0.22 vs $0.13 3.78 $73.2B +11.6%
ITUB R$99,144 -2.6% +1.5% 35.8% (up from 34.1%) 14.3% R$1.09 vs R$1.02 1.38 $106.6B +19.2%

P/S, market cap and 1-month change use the 10/23 close (1 month = 9/25 to 10/23). BRL revenue is converted at 4.9652 per dollar. FMP's revenue basis differs from XP's reported gross revenue (R$5,056M, +8% YoY).

XP is the margin leader of the group but a slower grower than the digital banks: op margin 32.6% vs 11-22%, revenue +14% vs +34% (INTR) and +50% (NU). At Friday's close it was the most expensive on P/S (4.06) after a +48% month. At the $15.16 premarket print the P/S is about 2.0 and trailing P/E about 7.4x (8.2x if the real is 10% weaker). The table also shows that the two names with the biggest election run-up (XP, INTR) are the two falling most this morning.

Move

Catalyst

Sector

Risks

Judgement

Overreaction, judging the depth of the gap on the facts known before the open. Giving back the election rally is justified: the thesis behind it (a right-wing win, then faster rate cuts and money moving into stocks) failed on Sunday. But the premarket price is not just back to where it was before the first round. It is about 30% below it, at the 2026 base lows and about 7-8x trailing earnings. Meanwhile the business has no new bad news: profit is growing, inflows are strong, capital is above target and a buyback is open. Lula was already president and the polling favorite at the $21.50 baseline. What would make the drop justified: a real much weaker than the sparse spot quote shows, a sharp jump in Brazilian rates, or new taxes on investment income. Premarket prints are thin, so the B3 open and the US open will show where the price really settles.

Sources