Oct 26, 2026: half the value gone before lunch
XP traded at $20.00 when premarket trading opened at 4am, already 34% below Friday's close. It slid through the morning to $13.91 at about 9:10am. The stock opened at $14.53 and hit $13.78 at the bell, then rose to $15.78 by 9:45am and held near that level. By 11:53am 73.2 million shares had traded, 5.5 times the 20-day average for a full day.
What pushed it down:
- The surprise result. Brazil's electoral court gave Lula 51.8% of the vote. Bolsonaro had led the first round on Oct 4, and the rally that followed drew billions in foreign money, Bloomberg Línea reported. The Ibovespa fell 10% at its open and tripped a circuit breaker for the first time since 2020.
- Rates and the currency. The real lost about 9.5% against the dollar, to about R$5.45, and some longer-dated swap contracts rose almost 300 basis points after hitting their trading limits, Bloomberg Línea reported. JPMorgan cut its view on Brazilian currency and rates to market weight.
- Fiscal worries. Public debt is above 80% of GDP. Vanguard's Ales Koutny said Brazil will need to keep real interest rates high, which leaves little room to cut.
- The size of the run-up. Finsiders Brasil reported that XP had risen more than 3.5% on three of the five sessions before the vote, as if the market had already priced a change of government.
A Brazilian outlet, BPMoney, also cited governance concerns and a board change. The filing does not support that reading: on Oct 16 XP said director Martin Escobari resigned voluntarily and not because of any disagreement, and appointed Rodrigo Kede Lima, president of the Microsoft Frontier Company, as an interim independent director. The stock rose in the sessions after that filing.
XP fell further than every peer we checked:
| Stock or fund | Oct 23 close | Oct 26, 11:53am | Change |
|---|---|---|---|
| XP (XP) | $30.41 | $15.65 | -48.5% |
| Inter & Co (INTR) | $7.19 | $4.59 | -36.2% |
| StoneCo (STNE) | $11.48 | $8.20 | -28.6% |
| PagBank (PAGS) | $11.44 | $8.35 | -27.0% |
| Itaú (ITUB) | $9.67 | $7.61 | -21.3% |
| Brazil ETF (EWZ) | $42.59 | $33.85 | -20.5% |
| Nubank (NU) | $15.16 | $12.28 | -19.0% |
After the drop, RSI(14) stood at 29, the shares sat 30% below their 50-day average and 19% below their 200-day average, and they were 52% below their 52-week high of $32.73. We covered the same shock in why PagBank stock fell, and more of the day's swings are in today's biggest stock moves.
Why XP fell the most
Two things set XP apart from the banks. First, it had the most to give back. It closed at $21.50 on Oct 2, jumped 31% to $28.15 on Oct 5 after the first round, and reached $30.41 on Oct 23, a 41% gain. At $15.65 it is now 27% below that Oct 2 starting point, while EWZ is 11% below its Oct 2 close of $38.19.
Second, XP is a broker and investment platform, so its revenue depends on Brazilians buying and trading securities. Retail revenue was R$3.88 billion in the second quarter, of which equities brought in R$1.14 billion and fixed income R$833 million. Higher rates can pull money toward fixed income, which XP also sells, but they also hurt the value of the bonds it holds: fixed income revenue fell 16% from a year earlier in the second quarter, which the company put down to the mark-to-market impact. BPMoney reported that JPMorgan and Morgan Stanley urged caution on XP, Nubank and the exchange operator B3 for exactly that exposure.
What the last report shows
| Measure | Q2 2026 | Change from Q2 2025 |
|---|---|---|
| Client assets | R$1,535B | +12% |
| Net inflow | R$28B | +188% |
| Net revenue | R$4,884M | +9% |
| Net income | R$1,384M | +5% |
| Diluted EPS | R$2.67 | +9% |
| Adjusted ROAE | 22.5% | from 24.4% |
| CET1 ratio | 17.1% |
XP bought back about R$1 billion of stock in the first half and has another R$1 billion program open. Our guide to valuing a bank stock covers how capital ratios and returns on equity feed into a price, and our explainer on when buybacks matter covers why a buyback at a depressed price can count for more.
The bull case
- The drop is larger than the country's. XP fell 48.5% against 20.5% for EWZ with no company news.
- The rally is more than undone. The shares sit 27% below their Oct 2 close and below their September range of about $19 to $21.
- The multiple has halved. Diluted EPS was R$5.16 in the first half. Annualized, that is about R$10.32. At $15.65 and R$5.45 to the dollar, the stock trades near 8 times that figure, against about 15 times on Oct 23. Our page on forward and trailing P/E explains why the two can tell different stories after a shock.
- The next report predates the vote. Third-quarter results cover July to September.
- Analysts were positive before the vote. Itaú BBA upgraded XP to Outperform on Oct 6, and UBS, JPMorgan and Citigroup kept positive ratings in late September and early October, though those calls predate the result.
The risks
- Rates. A higher rate path raises funding costs and can cut the value of XP's bond holdings again.
- The currency. A weaker real lowers the dollar value of every real XP earns and of its dividends.
- Activity. If Brazilians trade less and pull money from risk assets, equities revenue, XP's largest line, falls.
- Politics. Bolsonaro asked to annul the result, and markets will judge Lula's economic team before they judge XP.
What comes next
- The US Federal Reserve decision on Wednesday, Oct 28. It moves the dollar, which drives the real.
- Lula's economic appointments and budget plan. These will set the path for rates and the real.
- Third-quarter results, expected around November 16. Watch net inflows, client assets, the take rate, fixed income revenue and the buyback. Our guide to reading an earnings release covers what to check first.