Nu Holdings shares fell nearly 17% on Monday after Luiz Inácio Lula da Silva won Brazil's presidential runoff. The company announced nothing new, and investors appear to be reacting to what another Lula term may mean for Brazilian businesses.
Nu Holdings stock fell 16.95% to $12.59 at the close on Monday. The company had nothing new to announce, according to The Motley Fool. Investors were not necessarily passing judgment on the operations of the fintech, the report says. Instead, they reacted to the impact Sunday's presidential runoff might have on the country's enterprises.
Other Brazilian stocks also declined amid fears that the country's economy would suffer from adverse policies.
Lula's win surprises many observers
The leftist incumbent won the runoff in a result many observers and members of the electorate did not expect. He is to govern for another four years.
Investors often cheer continuity in government, but Lula is a proponent of direct intervention in strategic enterprises, the report says. Investors worry that this will continue over the next few years, against a backdrop of a struggling economy and a depreciating currency. The Brazilian real also declined against the U.S. dollar and other global currencies after the election.
Volume of 339.4 million shares on Monday
Nu volume reached 339.4 million shares on Monday, against an average volume of 72.6 million. The stock moved between $11.62 and $12.79 during the day, and its 52-week range is $11.20 to $18.98. Its market cap is $73.23B.
Motley Fool writer Eric Volkman says worries about Lula's reelection are to a degree justified, because the bulk of Nu's revenue comes from its home country. He sees economic development and the trajectory of interest rates as greater concerns than direct intervention in the company's business.
Volkman also writes that he thinks the company has grown to the point where it can weather a slump.
Source: The Motley Fool
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