NU Stock Suffers Worst Day On Record In Brazil Market Rout – Monness Crespi Initiates Coverage With ‘Buy’ Rating

• The sell-off in Brazilian stocks comes after President Luiz Inácio Lula da Silva won a fourth term.
• According to TheFly, concerns about government spending and fiscal discipline under Lula’s administration contributed to the broad sell-off.
• The iShares MSCI Brazil ETF, which tracks large Brazilian companies, was on track to log its worst day since 2020. 

Nu Holdings (NU) shares plummeted on Monday amid a broad sell-off in Brazilian stocks after President Luiz Inácio Lula da Silva won a fourth term, even as Monness Crespi started coverage of the digital bank with a ‘Buy’ rating.

The firm set a $20 price target, citing the long-term growth of buy-now, pay-later (BNPL) services and neobanks. Monness Crespi said BNPL’s share of spending and neobanks’ share of spending and lending have risen meaningfully over the past decade, but further growth will depend on greater customer engagement and a shift in customer mix.

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NU stock was down nearly 20% at the time of writing, on track for its biggest single-day loss in history. The shares were also among the top-trending tickers on Stocktwits alongside XP Inc. (XP), MercadoLibre (MELI), and iShares MSCI Brazil ETF (EWZ). 

On Stocktwits, retail sentiment around NU stock flipped to ‘extremely bullish’ from ‘bearish’ over the past day, and chatter jumped to ‘extremely high’ from 'low’ levels.

XP Stock Takes Biggest Hit Amid Brazilian Fintech Rout

XP, a Brazilian brokerage and investment platform, took the hardest hit. XP stock was down over 50% at the time of writing, hitting an over one-year low. 

Other U.S.-listed Brazilian fintech stocks also fell. Inter & Co (INTR) was down around 36%, StoneCo (STNE) slipped 29%, and PagSeguro (PAGS) fell 25%. 

MELI stock dropped around 15% in midday trade. The Latin American e-commerce and payments company counts Brazil as its largest market.

Brazil ETF Heads Toward Steepest Daily Drop Since 2020

The iShares MSCI Brazil ETF, which tracks large Brazilian companies, was on track to log its worst day since 2020. EWZ stock was down around 21% at the time of writing.

The current record is a 23.1% drop in March 2020, during the early days of the pandemic. If it falls more than 23%, it will be the fund's worst day since its debut in 2000.

According to TheFly, investors were concerned that Lula's administration could pursue policies that increase government spending and weigh on fiscal discipline, prompting a risk-off reaction across Brazilian assets.

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