Why Is $NU Falling, and Brazil Along With It?
When I opened my portfolio today, all my Brazilian stocks were down. This isn’t a problem with one company. The market is repricing the entire country.
📌 WHAT HAPPENED
On Sunday, October 25, Lula da Silva won the second round of the presidential election. He received 51.8% of the vote, while Flávio Bolsonaro got 48.2%. This will be Lula’s fourth term.
The market had expected the opposite result. Bolsonaro won the first round on October 4, and as recently as October 15, prediction market Polymarket gave him nearly an 80% chance of winning. The Ibovespa index closed at a record 209,067 points on October 9. Investors had therefore priced in a Bolsonaro victory in advance, and today they’re closing those positions.
According to ING, a change to the Labor Code helped Lula in the final stretch of the campaign. The Senate backed shortening the maximum workweek from 44 to 40 hours.
Investors are especially concerned about higher taxes and tighter regulation of banks, a weaker real, and budget deficits. Bolsonaro has also so far refused to concede defeat, according to CNBC.
📊 PERFORMANCE IN NUMBERS
❌ $XP: −48.9%
❌ $STNE: −27.9%
❌ $PAGS: −27.9%
❌ $ITUB: −22.6%
❌ $EWZ (the entire Brazilian market): −20.3%
❌ $NU: −18.9% (from 15.16 to 12.30 USD)
❌ $PBR: −16.3%
❌ $MELI: −10.0%
❌ $VALE: −4.3%
Financial companies are falling the most, as their profits depend on domestic interest rates, regulation, and how much Brazilians save and invest. $XP shares rose 31% after the first round and have now lost all of those gains. $VALE, which exports iron ore mainly to foreign markets, has fallen the least. Meanwhile, the S&P 500 rose today. This is entirely a Brazil-specific issue.
📌 $NU – HOW THE COMPANY IS GROWING
✅ Revenue: 1.5 billion USD (2021) → 16 billion USD (2025), averaging 52% annual growth over the last three years
✅ Earnings per share: 0.58 USD for 2025; analysts estimate 0.87 USD (2026) and 1.14 USD (2027)
✅ Q2 2026: net income of 1.06 billion USD, return on equity of 33%
✅ 139 million customers, around 118 million of them in Brazil
✅ Next earnings: November 12, 2026
Before the first round, on October 2, $NU closed at 13.43 USD. So the market hasn’t just erased the pre-election gains; it has also wiped out part of the original value.
The company didn’t change over the weekend. The environment in which it will make money did.
📊 VALUATION
✅ Trailing 12-month P/E: 19.4, or 38% below the five-year average of 31.2
❌ Regional bank industry median: 10.9, making $NU 78% more expensive
✅ Fair value according to the Bulios model: 19.77 USD, implying 59% upside
Based on my calculations using analyst estimates, the P/E is around 14.3 for 2026 and around 10.9 for 2027. At today’s price, $NU could therefore be valued like an ordinary regional bank a year from now, even though it’s growing much faster.
There is a catch, though. Nu reports its results in dollars but earns most of its money in reais. If the dollar strengthens 10% against the real, every real earned in Brazil is worth around 9% less in dollars. Analysts’ estimates have not yet been lowered, so some of the seemingly low valuation could disappear.
Of course, fair value is no guarantee. It’s the output of a model based on estimates.
❗ WHY I’M CONCERNED
A weaker real directly reduces earnings stated in dollars
Higher taxes and tighter regulation of the financial sector are a risk
Political uncertainty will persist until the losing candidate concedes
📌 MY POSITIONS
$NU: 160 shares, one purchase on June 5, 2026, at 12.14 USD. I’m still in profit even after today’s drop. The position makes up around 2.7% of my portfolio.
$MELI: one purchase on January 5, 2026, at 1,986 USD; I’m down 18% today. It’s a small position. MercadoLibre will report results in early November, which will show whether consumer spending in Brazil holds up after the election.
I don’t directly own any other Brazilian stocks.
🔍 IS THIS AN OPPORTUNITY?
In my view, $NU is just as strong today as it was on Friday. But the price now reflects greater country risk, and that risk is real. During Lula’s previous term, $NU reached an all-time high of 18.96 USD, so it can grow even under a left-wing government.
🛠 WHAT I’M DOING
I’m not selling. Fear on a single day isn’t a reason to change a long-term plan. At the same time, I’m not buying today; the first day after a shock is the worst time to make decisions. I’m watching three things:
$NU’s results on November 12, especially loan quality and margins
whether the real exchange rate stabilizes
the new government’s first steps toward banks
If the results confirm that the business is stable, I’ll consider adding to my position gradually. Brazil remains a small addition for me, not the foundation of my portfolio.
The market is selling the country today, not the company. My job is to distinguish what will really change from what is just emotion.
This is not investment advice. I’m sharing how I think about my own money. If you want to see what I do with my position after the results are released, follow my profile on eToro.
