Wall Street still flinches at anything with a São Paulo zip code, and this stock is using that bias to print gains while nobody’s watching.
If you want in on a fintech that’s compounding clients, products, and earnings while the crowd stays distracted, this one’s worth your full attention.
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This Is Where a Real Trend Stops Asking for Permission
XP Inc. (NASDAQ: XP) is doing something most stocks only manage for a quarter or two — it’s holding its momentum instead of giving it back the second excitement fades.
The story here isn’t just a single earnings beat. It’s a business that consistently delivers quarter after quarter, while the market treats Brazil like a liability rather than an opportunity.
XP runs the largest independent investment platform in Latin America, managing over two trillion Brazilian reais across roughly five million clients and nearly eighteen thousand financial advisors.
That’s not a startup finding its feet — that’s an established platform with real scale, and it’s still growing.
What makes this interesting right now is how the stock is behaving.
It’s up significantly year-to-date while the S&P 500 has barely moved, and yet the valuation still looks cheap relative to what the business is producing.
That’s the gap worth paying attention to... when price action says one thing and the multiple still reflects doubt, the trend usually has more room.
Action: Add to XP if it holds above $20.25 on normal volume; allocate roughly 15% of your intended position now.
If it pulls back toward $18.50–$19.00, cut to half and wait for a clean reclaim above $20 before adding more.
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Why the Crowd Still Hasn't Shown Up
Institutional money is clearly paying attention — a $105 million dark pool block trade landed recently, which isn't the behavior of someone walking away.
But the retail crowd?
Here's what's keeping XP out of the mainstream conversation:
The Brazil discount: Emerging market exposure makes people hesitate even when the fundamentals don't warrant it — and that keeps the stock cheaper than the business deserves.
No hype engine: XP isn't launching rockets or training AI models. It's building a financial platform, which means the move develops without a crowd rushing in to inflate the setup early.
The restructuring fog: Concentrating operations inside XP Bank sounds like boring corporate housekeeping, but the economics it's unlocking are showing up in the numbers right now.
The geography misread: Most people hear "Brazil" and picture political drama. XP's business serves Brazilian clients in local currency, so the FX risk is far more nuanced than the blanket discount the market applies.
The sophistication gap: XP's client base skews wealthy and financially engaged — a segment most global investors haven't properly modeled, and that's still growing fast.
When the narrative catches up to the price, this move gets a lot less subtle.
Action: If the stock stays above $19.50 on normal volume, build a starter position at around 10% of your target allocation.
A pullback toward $18.25 without breaking longer-term structure is worth using to push that toward 20%.
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What the Q4 Numbers Actually Tell You
The most recent quarter wasn't just a beat — it was a signal about the kind of business XP is becoming.
Revenue topped expectations, EPS came in ahead of consensus, and net income climbed quarter over quarter.
That's not a one-time event — it's the output of a model that's quietly getting more efficient.
Here's where the progress is showing up:
Earnings consistency: EPS stepped up meaningfully from a year ago — the kind of steady improvement that turns a "maybe" into a trend stock as skeptics run out of reasons to stay on the sidelines.
Recurring revenue shift: XP is moving away from transaction-dependent income toward fee-based advisory revenue, making the earnings stream more predictable and less sensitive to market swings.
Margin expansion underway: Funding costs fell in 2025, and management expects the trend to continue — flowing directly into margins even if top-line growth moderates.
New product momentum: XP is launching a dollar-backed stablecoin and reintegrating crypto brokerage in 2026 — not a pivot, but a direct response to what its existing client base is already asking for.
Repeatable delivery: Multiple consecutive quarters of beating expectations is how credibility gets built, and XP has been doing exactly that without getting credit for it yet.
The Q4 earnings report wasn't just a beat; it was a signal about the kind of business XP is becoming.
When a company is simultaneously growing revenue and cutting its cost of capital, the math starts getting interesting quickly.
Action: Stay positioned through the next quarter as long as revenue momentum holds, and move your defensive stop up to $17.50.
A break below $16.75 on heavy volume is your signal to cut roughly half and reassess.
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Peer Check: How XP Holds Up Against the Fintech Field
Nubank gets the headlines. StoneCo gets the volatility. XP gets the clients, specifically the wealthier, higher-margin ones; the neobanks haven't cracked.
That distinction shapes everything about how durable the revenue actually is and how the stock behaves when the sector gets choppy.
Here's where the separation shows up:
Margin profile: XP generates real earnings rather than burning cash to acquire clients... a fundamentally different category from most Latin American fintech peers.
Platform breadth: Fixed income, equities, insurance, credit cards, crypto, and now stablecoins — XP keeps clients inside its ecosystem rather than shopping around competitors.
Analyst conviction: Jefferies initiated with a Buy, UBS raised its target to $25, and the street consensus sits above where the stock trades today.
Client stickiness: Clients with diversified holdings across XP's platform don't leave easily, making the revenue base more resilient than day-to-day volatility suggests.
Competitive moat: XP built its identity on offering better products at lower cost than legacy state banks… a value proposition that keeps getting stronger as Brazilian investors become more financially sophisticated.
Action: If XP closes above $20.50 on average or better volume, push exposure to 20% of your target allocation.
If it falls below $18 for more than one session, take half off the table and wait for the structure to rebuild.
The Macro Setup That's Working in XP's Favor
Brazil is having a moment, and XP is the clearest way to capture it.
The Brazilian market is up over 20% this year as investors rotate into Latin American assets beyond stretched U.S. valuations, and as the country's leading investment platform, XP, sits directly in the path of that capital flow.
Here's what's lining up behind the move:
Emerging market rotation: Capital is actively moving toward Latin American assets this year, and XP is the most direct expression of that shift through a regulated, profitable platform.
Market share tailwind: Brazil's investment market has long been dominated by legacy banks charging high fees — XP has been systematically taking that share for years and still has significant runway left.
Digital asset expansion: The stablecoin and crypto relaunch position XP to capture a new wave of client assets without needing to build new infrastructure from scratch.
Institutional validation: The dark pool activity and multiple analyst upgrades signal sophisticated buyers are building positions quietly, which tends to precede broader recognition.
Rate environment benefit: XP's shift toward fee-based revenue insulates it from the margin compression that hits traditional banks hardest when rates move.
XP is moving into digital assets not as a speculative bet but as a product offering for clients who want dollar exposure and 24/7 liquidity.
That's a real demand, and being first to offer it through a trusted, regulated platform gives XP an advantage that's hard to replicate quickly.
Action: Add another 15–20% of your target position if XP breaks above $21 on higher volume.
If it slips below $18.75 and stays weak, trim by half and wait for a convincing reclaim of $20 before rebuilding.
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The Risk Is Real, and That's What Keeps the Setup Honest
No position in an emerging market fintech comes without strings, and you should know exactly what they are before sizing up.
The risks here are real, but they're also largely visible, which is what makes the position manageable rather than scary.
Here's where risk and opportunity line up:
Currency exposure: A weaker Brazilian real hits your dollar-denominated returns even when the local business is executing well — size your position with that in mind.
Competitive pressure: Nubank is pushing upmarket into wealthier segments — XP's answer is platform depth and advisory relationships, but execution still matters.
Restructuring complexity: Consolidating inside XP Bank takes time to flow through the financials, and the market tends to be impatient with transitions even when the direction is right.
Valuation buffer: The forward multiple still prices in meaningful doubt, which means bad news is partly absorbed already, and positive surprises have more room to move the stock.
Guidance discipline: Management has been consistently conservative, so when beats land, they carry conviction rather than skepticism from analysts who've heard it all before.
Action: Keep your stop at $18.50. If that level breaks with conviction, pare back to a core position and wait for a confirmed reclaim before rebuilding.
Don't let a manageable pullback become a full thesis reassessment.
Final Word: XP Is Running Ahead of Its Own Reputation
XP is doing the work quarter by quarter, and the market is slowly running out of reasons to ignore it.
Revenue's growing, margins are expanding, the platform keeps adding clients and products, and the crypto relaunch gives it a story that resonates well beyond traditional finance.
The real edge is the gap between what this business is actually doing and what most people assume when they hear "Brazilian fintech."
That gap closes eventually, and the people positioned before it does are the ones who benefit most.
Setup Scorecard
Entry Window: XP is holding near breakout levels with earnings momentum and a valuation that still prices in more doubt than the fundamentals justify — your reference point for gauging whether the trend has room to extend.
Catalyst Watch: Next earnings is the main event, but watch for stablecoin launch updates, crypto platform rollout, and XP Bank margin guidance in the meantime.
Upside Setup: A platform growing its client base, expanding products, and improving its cost of capital has a lot of levers — and analyst targets suggest the market hasn't caught up yet.
Downside Cushion: A reasonable valuation and sticky advisory client base limit how far a pullback can go if fundamentals stay intact.
What Moves It Now: Watch client asset growth, XP Bank margin trajectory, and early stablecoin adoption data; these tell you whether the platform story is accelerating or stalling.
That's our coverage for today. Thanks for reading! Reply to this email with feedback or any value names you'd like us to dig into.
Best Regards,
—Noah Zelvis
Undervalued Edge
