Petrobras ADRs sink 14% as Lula's surprise win revives fuel-price and dividend fears

Petrobras ADRs (PBR) were down 16.2% by midday on Monday, Oct. 26, and closed about 14% lower at $22.50, after President Luiz Inácio Lula da Silva won Sunday's runoff. Lula beat conservative challenger Flávio Bolsonaro 51.8% to 48.2%, a result investors had not expected; Brazilian stocks had rallied after Bolsonaro's stronger-than-expected first-round showing, and those bets reversed on Monday. The selloff was broad: Nu Holdings (NU) fell 18% in the same session, according to Yahoo Finance.

For Petrobras the worry is policy, not operations. Investors expect a fourth Lula term to bring more government control of the state-controlled oil company, pressure to hold down domestic fuel prices, a halt to privatization, and a tilt from dividends toward investment. Payouts are a large part of the case for owning the stock: Petrobras approved R$17.4 billion in shareholder remuneration with its second-quarter 2026 results.

CEO Magda Chambriard pushed back, describing the drop as a speculative move unrelated to the company's business and saying it was a good time for anyone who wants to buy the shares. Shares in São Paulo fell less than the ADRs, down around 10% according to reports of her interview.

What to watch: the incoming government's first statements on fuel pricing and on Petrobras's dividend policy, any changes to the company's board or management, and whether the ADRs, which The Motley Fool put at about 6.6 times trailing earnings, find buyers once the political shock fades. Brazil-exposed investors will also be tracking how far the broader market selloff extends beyond the first session.