XP's Recovery Fund for Ambipar Losses Could Be a Game Changer for XP (XP)

• XP recently launched a recovery fund made up of deeply discounted Ambipar bonds to help retail investors recoup some of the significant losses sustained after the forced early redemption of Ambipar-linked Structured Operations Certificates originally issued by XP.
• This initiative specifically addresses the impact to clients following a sharp decline in Ambipar bond values, giving affected investors a vehicle to potentially recover value by reinvesting their proceeds directly into the discounted bonds.
• We'll examine how XP's direct intervention to address client losses could influence its investment narrative and client trust going forward.

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XP Investment Narrative Recap

For shareholders, the core belief in XP hinges on the digital investment platform’s ability to keep expanding market share by deepening retail penetration and broadening its product suite in Brazil’s evolving financial sector. While the recent recovery fund for Ambipar-linked losses demonstrates a commitment to client trust, it is unlikely to materially impact the primary short-term catalyst of accelerating retail asset growth or the major risk of fee pressure from increased competition and changing advisory models.

Among recent news, XP’s Q2 2025 earnings report stands out, with both revenue and net income growing year-over-year. This growth momentum provides a counterpoint to concerns raised by the Ambipar incident, as robust financial performance remains a vital signal for the company’s ability to withstand one-time shocks and keep investing in operational improvements.

Yet, it’s important to watch for signs of fee compression threatening XP’s long-term margin strength, as ...

Read the full narrative on XP (it's free!)

XP's narrative projects R$25.2 billion revenue and R$6.8 billion earnings by 2028. This requires 14.5% yearly revenue growth and a R$1.9 billion earnings increase from today's R$4.9 billion.

Uncover how XP's forecasts yield a $22.92 fair value, a 40% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members submitted six fair value estimates for XP, ranging from R$17.79 to R$27.92 per share. While some focus on the platform’s capacity to drive retail client growth, others caution that competitive pressure on fees could weigh on future profitability, underlining the importance of exploring different views on XP’s prospects.

Explore 6 other fair value estimates on XP - why the stock might be worth as much as 70% more than the current price!

Build Your Own XP Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your XP research is our analysis highlighting 5 key rewards that could impact your investment decision.
• Our free XP research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate XP's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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