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Why PagSeguro Digital Stock Soared Today
Key Points
Brazilian Sen. Flávio Bolsonaro won 47.3% of the vote in Brazil's first round of presidential elections.
Incumbent President Luiz Inácio Lula da Silva won only 44.8%.
Brazilian voters and investors seem to prefer Bolsonaro to win.
Pagbank (NYSE:PAGS), the Brazilian fintech stock and digital bank, flew higher Monday morning, soaring 21.7% through 11:50 a.m. ET.
You can thank the voters of Brazil for that.
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Election Brazil 2026
Brazil wrapped up its first round of voting for a new President Sunday night. With 98% of votes counted, conservative candidate Flávio Bolsonaro -- son of the former President Jair Bolsonaro and a Brazilian senator in his own right -- won 47.3% of the vote to incumbent President Luiz Inácio Lula da Silva's 44.8%.
Bolsonaro the younger didn't win the election outright; he'd have needed more than 50% of the vote for that. He does seem well-positioned to win the presidency, however, when a second round of voting concludes on Oct. 25. As The Wall Street Journal reports, "other right-wing candidates" won about 5% of the votes in the first round. Those voters are more likely to shift their votes to Bolsonaro than to Lula. If even half of them do so, it's likely to put Bolsonaro over the top.
What does any of this have to do with PagSeguro?
The Journal says voters are upset about high taxes and Lula's "stewardship of the economy." Investors seem to think that change is needed, and that a Bolsonaro presidency will be good news for Brazilian business. And since PagSeguro conducts 99.1% of its business in the country, investors also assume that what's good for Brazil will be good for PagSeguro stock.
It wouldn't take much to prove them right.
Valued at just 6.2 times trailing earnings, PagSeguro stock is priced to move. Analysts already forecast the company will grow earnings by more than 10% annually over the next five years. At its current price, this stock could perform well... whoever wins the election.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends PagSeguro Digital. The Motley Fool has a disclosure policy.