XP Inc Plunges More Than 50% as Lula da Silva Wins Brazil Presidential Runoff in Upset

XP Inc. fell roughly 52% on Monday after Luiz Inácio Lula da Silva won an unprecedented fourth term as Brazil's president, defeating Senator Flávio Bolsonaro in a Sunday runoff election that caught markets badly off guard. XP shares were already down nearly 47% in premarket trading, quoted around $16.00, before extending losses through the session alongside a broad collapse in Brazilian-linked assets.

The selloff reflected how aggressively investors had repositioned toward Brazilian equities following Bolsonaro's strong first-round showing earlier in October. Expecting a more fiscally disciplined government, traders had driven Brazilian stocks to record highs in the interim, and Lula's win unwound those bets in a single session. The iShares MSCI Brazil ETF fell 25% in premarket alone. StoneCo dropped 39%, Inter and Co fell roughly 32%, Banco Bradesco declined 28%, Itaú Unibanco fell 25%, and Petrobras shed about 21%, with MercadoLibre, Vale, Embraer, and Vivara also dropping sharply.

Bolsonaro refused to concede, saying he would seek annulment of the outcome, adding political uncertainty on top of fiscal concerns. Unusual put option volume in XP climbed notably by mid-afternoon Monday, signaling continued hedging activity. The Seeking Alpha analysis published the same day argued that Lula's win had collapsed a valuation that had already fully priced in a Bolsonaro victory, making XP's selloff disproportionate to any immediate change in the company's underlying business.