Brazilian fintech XP (XP) jumped more than 30% on Monday, hitting a three-year high of $29. That made it the day's second-biggest bullish price surprise, with a standard deviation of 4.38.
XP’s shares hit a 52-week low of $14.80, less than two months ago. Now it’s only $8.52 from a 5-year high. Oh, how times have changed.
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As far as I can tell, there’s no obvious news that’s moved the stock. Yesterday’s volume was 48.25 million, more than four times the 30-day average, while its options volume was 93,155, more than double the 30-day average.
Either someone knows something is happening behind the scenes or momentum investors have decided to pile on the bandwagon.
In September, I discussed XP in Unusual Options Activity: Institution Bets Big on XP With Moonshot Bull Call Spread.
“The bottom line: In early 2021, XP stock traded at an all-time high of $50.21. It can get back there in the next 2-3 years if it continues to grow its market share in Brazil,” I wrote on Sept. 17.
“As for yesterday's bull call spread, it’s a bold move by the institution that made it. You might want to buy XP in a big way.”
As they say, even a blind squirrel finds a nut now and again. Pure luck on my part.
Up 47% since mid-September, the question for investors today is whether to ride the wave or take profits.
I’ll consider both.
How’s That XP Bull Call Spread?
The bull call spread shown above is the one I discussed in September.
The institution that made the moonshot bet spent $8.4 million on Nov. 20 $24 long calls and received $6.6 million by selling an equal amount of Nov. 20 $25 short calls for a net debit of $1.8 million. The rationale was to reduce its deep OTM (out-of-the-money) bullish bet by nearly 80%.
That bet just came in. It will close both legs for a tidy three-week profit.
Where to Now?
The Barchart Technical Opinion is an 88% Strong Buy. That’s not quite 100%, but the technicals remain intact. However, XP’s 14-day relative strength is 88.93; anything over 70 suggests the stock is overbought.
Analysts have turned more bullish on XP over the past three months. Of the 10 analysts covering the stock, 7 rate it a Strong Buy (4.40 out of 5), up from 5 three months ago (3.80 out of 5). ‘
That’s the good news. The bad news is that the analysts’ 12-month price target is $23.27, well below where it’s currently trading. However, despite the price target, most recent changes to analyst ratings and target prices have been bullish.
XP reports Q3 2026 results on Nov. 16. If it exceeds analyst expectations -- the estimates are $1.03 billion for revenue and $0.55 earnings per share, according to S&P Global Market Intelligence -- there’s a good chance that more analyst rerating will follow.
The XP Valuation
XP is expected to earn $2.16 per Class A share in 2026. Based on its $28.99 share price as I write this on Tuesday morning, its forward P/E is 13.4x, which is reasonable given revenues are expected to grow nearly 9% this year and 12% in 2027.
Here’s the five-year chart for forward P/E.
Source: S&P Global Market Intelligence
While you can see that the multiple has jumped up due to yesterday’s 30% gain, it’s still just 11.9 times XP’s 2027 earnings per share estimate, below the five-year average of 12.90, and significantly less than the five-year high of 35.73x in October 2021.
If XP is to become the next Nu Holdings (NU), or even overtake it, which is unlikely, it will have to keep making inroads with Brazilian banking customers. That’s a tough nut to crack.
In Brazil, Nu had nearly 118 million customers as of June 30, 15.8 million in Mexico, and over 5 million in Colombia. It is easily the largest digital bank in Latin America.
XP, which focuses on HNW (high net worth) customers in Brazil, had 4.8 million active clients at the end of June. However, because it began as an asset management platform serving Brazil's financial advisor community, it had 2.2 trillion Brazilian reais ($442.1 billion) in AUMA (assets under management and administration) as of Q2 2026, up 17% from a year ago.
The two companies remain apples and oranges. I’m not sure either worries too much about the other.
XP’s wholesale banking revenue in the second quarter was 1.18 billion reais ($236.0 million), up 32% from a year ago and up 400 basis points from Q2 2025, accounting for 23% of total revenue.
That’s pretty good, considering it only entered wholesale banking in mid-2020.
While its retail platform, which includes investments, insurance, and other non-bank revenue streams, generates most of its revenue, the wholesale banking platform continues to grow faster; it should represent an even larger share of XP’s revenue in the years to come.
In the Q2 2026 conference call, XP management highlighted the company’s transition away from acting as a middleman distributor of products to a wealth management advisory that should deliver even greater profits in the future.
I like where XP is headed.
The Bottom Line on XP Stock
Do I think XP’s share price can get back to the $50s where it traded in 2021? I do.
Do I think it will do so without significant volatility? I do not.
That said, XP, according to Google’s Gemini, has had 59 single-day drops of 5% or more since late 2021, all but 10 before 2024. As the business matures, volatility has fallen, with only two since the beginning of 2025. I’m not sure if that takes yesterday’s big move into account.
If you’ve got a 3-5 year horizon, I wouldn’t be afraid to buy now. However, I’d probably consider a half position, leaving some dry powder for the inevitable correction.
XP remains a long-term buy in my opinion.
On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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