Why XP Inc. (XP) Went Down On Wednesday?

We recently published a list of Today’s 10 Worst-Performing Stocks. In this article, we are going to take a look at where XP Inc. (NASDAQ:XP) stands against other worst-performing stocks.

Wall Street’s main indices finished mixed on Wednesday, with the Dow Jones emerging as the sole decliner as investors digested more news of tariff threats from President Donald Trump.

The Dow Jones dropped by 0.20 percent. In contrast, the S&P 500 and Nasdaq clocked in gains of 0.49 percent and 1.22 percent, respectively.

Ten companies mirrored a mostly pessimistic trading—four of which were Chinese stocks—as traders sold off to minimize risks from the potential impact of the US’ trade war with China.

In this article, we have identified the 10 worst performers on Wednesday and detailed the reasons behind their performance.

To come up with the list, we considered only the stocks with at least $2 billion in market capitalization and $5 million in trading volume.

A financial professional examining price changes on a stock broker’s trading floor.

XP Inc. (NASDAQ:XP)

XP retreated for a third day on Wednesday, losing 5.48 percent to end at $14.14 each as investors sold off positions following allegations from a short seller that it was engaging in a “Madoff-like Ponzi scheme.”

A report from short seller Grizzly Research targeted XP’s financial practices, particularly the operations of its fund called GLADIUS FIM CP IE, claiming that XP’s profits largely depend on deceptive financial products sold to retail clients.

It also claimed that XP engages in a Ponzi scheme through the sale of Structured Operations Certificate which are allegedly presented as proprietary trading profits but are in reality funds from new premiums.

The research said that GLADIUS which returned more than 2,419 percent over the past five years relies on the said scheme, and that without the profits from GLADIUS and an affiliated fund, COLISEU FIM CP IE, XP would reportedly be unprofitable.

XP, meanwhile, said that it was aware of the allegations, saying that it reinforces its “unwavering commitment to transparency, regulatory compliance, and strict governance” and that it “adheres to all regulations set by regulatory bodies.”

Overall, XP ranks 6th on our list of worst-performing stocks. While we acknowledge the potential of XP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than XP but trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.