Is XP (XP) Trading Near-Term Margin Pressure for a More Resilient Distribution Model?

• On December 12, 2025, XP Inc. CEO Thiago Maffra outlined the firm’s 2026 priorities, focusing on standardizing Independent Financial Advisors’ services, building alternative distribution channels, and extending premium offerings to lower-tier clients, while acknowledging near-term earnings pressure from higher interest rates and heavier B2C investment.
• This shift signals XP’s intent to rebalance its model toward more controlled distribution and broader customer reach, trading some short-term profitability for potentially stronger engagement and service consistency across its platform.
• We’ll now explore how XP’s push to standardize advisor services could reshape its medium-term investment narrative and risk-reward profile.

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XP Investment Narrative Recap

To own XP, you need to believe in its ability to turn a fast-growing Brazilian investment platform into a scalable, profitable franchise as client assets compound over time. The December 12 update reinforces that the near-term story is still about earnings compression from higher interest rates and heavier B2C spend, which keeps execution on client growth and engagement as the key catalyst, while elevated operating costs remain the most immediate risk to the case.

Among recent developments, XP’s expanded buyback program of up to R$1,000 million in Class A shares stands out in this context, as it runs alongside management’s push to standardize advisor services and grow B2C. This combination puts more focus on whether XP can keep lifting revenue and net income, as seen in its Q3 2025 results, fast enough to justify ongoing reinvestment and support returns on the capital being put to work.

But while XP invests ahead of growth, investors should also be aware of the risk that rising marketing, technology and sales costs could...

Read the full narrative on XP (it's free!)

XP's narrative projects R$25.2 billion revenue and R$6.8 billion earnings by 2028. This requires 14.5% yearly revenue growth and about R$1.9 billion earnings increase from R$4.9 billion today.

Uncover how XP's forecasts yield a $23.17 fair value, a 45% upside to its current price.

Exploring Other Perspectives

Five members of the Simply Wall St Community currently see XP’s fair value between US$17.95 and US$23.17, reflecting a wide spread of individual models. You can weigh those views against the current concern that higher operating expenses and B2C investment may pressure near term profitability and consider what that could mean for XP’s progress toward its longer term goals.

Explore 5 other fair value estimates on XP - why the stock might be worth as much as 45% more than the current price!

Build Your Own XP Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your XP research is our analysis highlighting 5 key rewards that could impact your investment decision.
• Our free XP research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate XP's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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