Brazil’s Eletrobras (ELET3; ELET6) shares rose on Thursday (August 7), even though the business recorded a significant loss for the second quarter and declared a multibillion-real dividend.
According to local media outlet E-Investidor, at 11:10 a.m. Brasília time, common shares (ELET3) were up 7%, while class B preferred shares (ELET6) increased by 6.17%.
The rise follows Eletrobras’ declaration of a R$1.325 billion net loss for Q2 2025, which equates to around $250 million.
The outcome was a significant reversal from the R$1.743 billion profit ($329 million) reported in the same time last year, and it fell far short of market expectations. Prévias Broadcast surveyed analysts, who predicted a net profit of R$1.1 billion ($208 million).
According to the income statements presented on Wednesday night (6), net revenue in the second quarter of 2025 was R$10.1 billion, up 21.5% year on year.
The company’s EBITDA (earnings before interest, taxes, depreciation, and amortisation) for the second quarter of 2025 was R$1.25 billion, a 71.6% decrease from the previous year.
Despite the headline loss, analysts and investors focused on better-than-expected operating metrics, particularly EBITDA and dividend yield.
Broker optimism helps steady market outlook
Analysts at XP reported a strong underlying performance in the quarter. Adjusted EBITDA came in 5% higher than expected, indicating increased operational efficiency despite the bottom-line loss.
XP observed that the outcome comes after a time of decreased market expectations following a cautious Q1 guidance and management tone.
“The share price move appears to be a reversal of previously lowered expectations, rather than a shift in fundamentals,” says Bruno Vidal, an analyst at XP.
Citi analysts also expressed optimism, citing better-than-expected regulatory performance and an attractive dividend distribution of R$4 billion (about $755 million).
The dividend breakdown is as follows: R$2.43036 ($0.46) each Class A preferred share, R$1.93348 ($0.36) per Class B preferred share, and R$1.75771 ($0.33) per common share and golden share.
Strategic recommendations amid volatility
Investors are in the air in the short term following Eletrobras’ increases and disappointing earnings. XP reaffirmed its buy recommendation for ELET3 and ELET6, with potential upside.
XP assigned a price target of R$50 ($9.43) for ON common shares, 27.98% upside from the last close. The target for class B preferred shares (PNB) is R$54 ($10.18), a 28.57% upside based on the last close.
As operational performance appears to have stabilised post pandemic and market sentiment has started to recover, analysts are keenly observing whether the stock rally is indicative of renewed investor activity — or simply a correction versus paper-thin market expectations earlier this year.
What’s at stake?
Overall, the specific results of Eletrobras and the strong market reaction are a clear reminder of one of the most relevant dynamics in emerging markets: relative performance and expectations may matter for investors as much or more than absolute performance.
Eletrobras produced a large dividend despite a large net loss while beating on the operational side, indicating that the company is fundamentally solid and a positive in the overall context.
This rebound in investor confidence may provide some stability to a stock that has swung violently in recent months for Brazil’s largest power utility, as well as highlighting the previously little-observed link between operational metrics and capital returns in valuation, following a post-privatisation landscape in which investors are increasingly picking on nits.
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