Haverhill Financial Research · Analysis · October 26, 2026
The purest election trade on a U.S. exchange, unwound
$$XP ( ▲ 0.82% ) closed down 48.36% at $15.70 on Monday, touching $13.78 intraday — a new 52-week low. There was no earnings report, no fraud headline, no deal. The catalyst was a ballot box: on Sunday, Lula da Silva defeated Flávio Bolsonaro in Brazil's presidential runoff, 51.75% to 48.25%, and markets that had positioned hard for the opposite result spent Monday repricing everything Brazilian. Nu Holdings fell 16.9%, Petrobras was down over 20% in the pre-market, and the Brazil ETF opened down roughly 25%.
XP took the worst of it because it had been the purest expression of the trade. After Bolsonaro's surprise first-round lead on October 4, investors piled into the market-friendly fiscal story: XP gained roughly 50% in a week, closed up 30.9% on October 5 alone, and hit a four-year high of $32.29 on October 9. UBS chased with a Buy and a $37 target, up from $25. Eleven trading days later, the stock is below where it traded before any of it started.
Eleven trading days separate the two bars.
Why the result hits XP's model directly
XP is Brazil's largest retail brokerage and investment platform, which makes it leveraged to Brazilian risk appetite in three ways at once. If markets price Lula's win as higher public spending, the likely consequences are stickier inflation, higher long-term rates, and a weaker real. Higher rates pull Brazilian savers out of equities and funds — XP's highest-value products — and back into fixed income. A weaker real shrinks the dollar value of the ADR mechanically. And a lasting political-uncertainty premium suppresses the trading and allocation activity the whole platform monetizes.
The fundamentals were never the story in October, in either direction. XP's last reported quarter (Q2 2026) showed net income of R$1.38 billion, up a modest 5%, on revenue of R$4.88 billion, up 9%. The 50% melt-up was macro hope; Monday's 48% collapse was macro hope reversing — plus a new layer of genuine concern about what the operating environment looks like now.
What we're watching
The finance-minister signal. Lula's cabinet picks and early fiscal language are the single biggest driver of whether Brazilian rates and the real stabilize — and with them, XP's revenue mix.
Analyst resets. Pre-election targets like UBS's $37 are stale on arrival. The speed and depth of the coming downgrades will set the near-term trading range.
Q3 results, expected around mid-November. The quarter itself predates the election, but management's commentary on client flows since Sunday will matter more than the printed numbers.
Violent two-way trading. A 48% one-day move invites short covering and dead-cat bounces. Volatility here is a feature of the setup, not a signal.
Sources and disclosures
Election result and market reaction via TradingKey (October 26, 2026); closing price per Benzinga (October 26, 2026); the October rally detail via TIKR and TradingKey (October 5–9, 2026); Q2 2026 figures as reported by Yahoo Finance (October 10, 2026). The Q3 report timing is approximate. Report dates can change.
Disclosures. Haverhill Financial Research is a publisher of general financial commentary. This article is not personalized investment advice and does not consider any reader's financial situation; readers should do their own research. Nothing here is a recommendation to buy or sell any security. The author of this post does not hold positions in the companies named. Data as of October 26, 2026.
