Why Petroleo Brasileiro SA Petrobras ADR Crashed Today
Shares of Brazilian oil giant Petroleo Brasileiro SA Petrobras ADR(NYSE:PBR) (NYSE:PBRA) joined the ongoing rout of Brazilian stocks Monday, crashing 16.2% through 12:10 p.m. ET.
Why? Incumbent Brazilian President Luiz Inácio Lula da Silva just beat conservative challenger Flávio Bolsonaro 51.8% to 48.2% in the second, run-off round of that country's presidential election. This result surprised investors who had bet that Bolsonaro's victory in the first round of voting, earlier this year, implied a likely victory for the conservative in Sunday's contest as well.
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But that didn't happen.
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Election Brazil 2026
Bolsonaro is refusing to concede defeat, alleging the incumbent administration suppressed voting in key Bolsonaro-leaning districts. Almost all other Latin American heads of state, however, have already made their calls to congratulate Lula on his victory; as of this moment, only Argentine President Javier Milei, another conservative, is holding back.
Momentum seems on Lula's side, and barring yet another surprise, it seems likely the current president will remain president in Brazil through another term -- ending in 2030.
What does any of this have to do with Petroleo Brasileiro SA Petrobras ADR?
What does all of this have to do with Petrobras in particular? Well, since returning to office in 2023, Lula has put government control "at the center of his energy policy," as Argus Media reports, imposing price controls on domestic fuel sales and ending privatization of the company's assets. He's also ordered Petrobras to expand production and favor capital investment over dividend payouts.
Short-term, that might sound like bad news to investors, but longer term it could pay off. With Petrobras shares trading at a cheap 6.6x trailing earnings, today might be a good time for investors to jump on the sell-off and snap up some cheap Petrobras shares!
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .
Why Petroleo Brasileiro SA Petrobras ADR Crashed Today was originally published by The Motley Fool
