What happened

Nu Holdings (NU -1.69%) soared on Monday, finishing the day up 8.8% at $5.00 per share. The Brazil-based online bank had gained as much as 11.1% at about 2:24 p.m. ET. The stock price is down about 46% year to date.

It was one of the day's top performers as all of the major indexes were in negative territory with the Dow Jones Industrial Average down 127 points (-0.4%), the S&P 500 down 29 points (-0.7%), and the Nasdaq down 114 points (-1%).

So what

Nu Holdings, an online bank based in Brazil, likely got a boost from Sunday's presidential election, which saw leftist Luiz Inacio Lula da Silva defeat the incumbent president Jair Bolsonaro, a right winger.

Overall, the stock market had a mixed reaction to Lula's win, as many retail and consumer, homebuilder, and education stocks did well, while businesses in other sectors were down. 

Analysts at Goldman Sachs (GS 0.22%) told Reuters that Lula's policy proposals related to income support and consumer-debt restructuring could support domestic consumption, which would be good for Nu Holdings. But these are just initial market reactions to the news. The impacts will become more apparent as proposals are fleshed out and the transition moves forward.

BOVESPA, the Brazilian stock market, was up about 1.1% on Monday when the U.S. markets closed.

The market may have also breathed a sigh of relief as there appears to be, at least as of Monday afternoon, no challenges from Bolsonaro, who has made statements throughout the campaign casting doubts on the legitimacy of the voting system. Bolsonaro has not yet conceded defeat nor has he commented after the loss, so hopefully the transition is smooth.

Now what

The Brazilian economy has been fairly strong, growing at a 3% clip this year. It is too early to tell what impact Lula's proposals will have on the larger economy, but analysts are keeping an eye on who his cabinet members will be for an indication of whether they will be more left-leaning or centrist.

As for the bank, it has enjoyed rapid revenue and customer growth as it has been a disruptor with lower-cost digital banking services. It became profitable in Brazil for the first time last quarter and with some 65 million customers, it serves about 36% of banking customers in Brazil. It has also expanded into Mexico and Colombia, where it is also seeing growth, and announced plans to launch its own cryptocurrency, Nucoin, in the first half of next year.

The company reports third-quarter earnings on Nov. 14, so it will be interesting to see if it has maintained its meteoric growth and profitability. But there is a lot of growth potential in the underserved and underbanked Latin America market for a low-cost digital disruptor. Definitely one to keep an eye on.