XP's Sharp 8.57% Drop Amid $290M Volume Surge Ranks 348th in Market Activity

On August 19, 2025, XP (XP) closed with an 8.57% decline, despite a 158.22% surge in trading volume to $0.29 billion, ranking 348th in market activity. The stock’s sharp drop followed mixed second-quarter earnings, highlighting both record profitability and structural challenges.

XP reported a 18% year-over-year rise in net income to BRL1.32 billion, driven by a 24.4% return on equity and a 22% increase in diluted earnings per share. Total gross revenue reached BRL4.7 billion, up 4% annually, while new product revenue grew 146% to BRL256 million. The company’s ecosystem expansion, including global accounts and consortium services, underpinned these gains. Assets under management and administration hit BRL1.9 trillion, reflecting a 17% annual increase.

However, corporate client outflows of BRL6 billion and a 5% decline in earnings before taxes offset some of the positives. Rising SG&A expenses—up 10% year-over-year—highlighted ongoing cost pressures, and the fee-based model, comprising just 5% of client assets, lagged behind adoption rates in developed markets. Management noted macroeconomic headwinds, including high interest rates and banking reciprocity demands, which strained corporate lending strategies.

CFO Victor Mansur emphasized capital efficiency, with a 34.5% efficiency ratio and a 20.1% capital ratio. The company plans to distribute over 50% of profits via dividends and buybacks, though the balance between the two will depend on stock price and board discretion. CEO Thiago Maffra outlined goals for BRL20 billion in quarterly retail inflows, leveraging product innovation and expanded distribution channels.

Backtesting of XP’s performance after a 6% intraday drop showed a 48.64% win rate over three days, 48.94% over ten days, and 48.34% over 30 days. The maximum return during the period reached 4.48% on day 59, indicating potential for recovery following sharp declines.