XP (XP) Falls After Lula Win, Is The Stock Still Cheap?

XP (NasdaqGS:XP) is back in focus after a sharp 48.1% share price drop following President Lula’s election win in Brazil. This development has pushed investors to reassess Brazil exposed financial platforms.

The 48.1% slump in XP's share price over the past week sits on top of a wider pullback, with a 30 day share price return of down 22.2% and a year to date move of down 1.4%, while total shareholder return over five years is down 44.8%. Recent pressure has largely tracked political headlines around President Lula's election win and the reassessment of Brazil exposed assets, rather than any specific shock from XP's latest board changes or operating updates.

Stress test your Brazil exposure by lining it up against our curated 30 resilient stocks with low risk scores that aim to hold up better when politics hit sentiment hard.

XP now trades far below where it started the month, which leaves you weighing two stark views. Has the recent selloff largely run its course, or is meaningful upside still on the table at this valuation?

Most Popular Narrative: 44% Undervalued

XP closed at $15.96 while the most followed valuation narrative anchors fair value at $28.73, so the recent selloff sits against a framework that already treated the stock as materially cheap before the latest political shock.

XP's continued diversification of its product suite, now including cards, insurance, pensions, FX, international investments and SME acquiring and banking solutions with more than R$1b in annual revenue from new verticals, supports deeper client cross sell and a broader fee pool that can help offset pressure on investment take rates and support earnings resilience.

See why 45 investors see XP as 44% undervalued.

Result: Fair Value of $28.73 (UNDERVALUED)

Still, XP’s story can break if fee compression in fixed income deepens, or if heavy spending on technology and sales fails to translate into matching revenue.

Find out about the key risks to this XP narrative.

Next Steps

Sentiment around XP is clearly split right now, so move fast, review the key data yourself, and weigh both the 4 key rewards and 2 important warning signs.

Looking for more ideas beyond XP?

Do not stop at XP. Use these focused lists to pressure test your portfolio, spot fresh ideas early, and avoid watching opportunities pass by.

• Target resilient balance sheets and stronger fundamentals while market nerves are high by reviewing our list of solid balance sheet and fundamentals (24 results).
• Hunt for quality at a discount as valuations reset and compare XP against the wider pool in the 29 high quality undervalued stocks.
• Lock in potential income streams alongside capital appreciation goals by scanning companies in the 5 dividend fortresses.

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