April 3, 2025

StoneCo Ltd. (STNE), headquartered in the Cayman Islands but operating in Brazil, is one of the leading providers of financial technology and software solutions to merchants and integrated partners. Think of them as the secret sauce behind Brazil’s booming e-commerce scene—enabling everything from in-store to online to mobile payments. But the real question is: Should you be investing in this fintech powerhouse? 🤔

Let’s break it down and see if StoneCo is your next big investment!

What’s StoneCo’s Secret Sauce? 🧑🍳💰

StoneCo is all about making transactions seamless and efficient. With a portfolio of services like card payments, banking products, and integrated software solutions, it’s no wonder the company is a key player in Brazil’s cashless payment revolution. Here’s why StoneCo might be worth considering:

• 14% Compound Annual Growth Rate (CAGR) in revenue 📈

• 92% CAGR in earnings per share (EPS) 💸

• 20 percentage point increase in Return on Equity (ROE) 🎯

And to make things even juicier, StoneCo boasts an impressive 89.19% institutional ownership (hello, big players like Blackrock and Madrone Advisors, led by Rob Walton—the son of Walmart founder Sam Walton—who owns a hefty chunk) and 5.14% insider ownership. 🏦💼

StoneCo Ltd. (STNE) Q4 2024 Performance Recap 📊

StoneCo has been busy making waves in Brazil's digital payments market, and the latest earnings report shows a solid performance—despite some bumps along the way!

• MSMB card transaction value hit R$403 billion, missing guidance by just 2%, thanks to the lightning-fast rise of PIX payments. However, StoneCo still outperformed the market, achieving 18% year-over-year (YoY) growth in TPV, reaching a whopping R$516 billion. 💳💸

• Retail deposits surged 42% YoY, totaling R$8.7 billion, beating guidance by 24%. 🏦

• Credit portfolio exploded nearly fourfold, reaching R$1.2 billion (well above the R$800 million target). 💳📈

Industry Growth 🚀 StoneCo operates in Brazil’s booming electronic payments sector, which has been growing at a 19% CAGR over the past five years. But StoneCo’s not worried about market saturation. They’re doubling down on opportunities like PIX (Brazil’s payment system), and their diversified offerings in payments, banking, and credit services are paying off. 💰

Key Takeaways:

• Strategic Focus: StoneCo is on track with their long-term priorities—winning in the MSMB sector, enhancing client engagement, and scaling through platforms.

• Growth Potential: The total addressable market is far from saturated, and their focus on expanding beyond personal (toward intermediate) consumption is a big win.

• Diversification: StoneCo is moving beyond payments, with banking and credit services becoming big contributors to its financial results.

Where’s the Opportunity? 🧐📉

Despite stellar growth and solid cash flow, StoneCo's share price dropped 55% in 2024 (yikes!), even though the Nasdaq was up 28%. 😬 This wasn’t necessarily the company's fault—after all, sometimes the market’s volatility disconnects the price from the company’s real value. But could this drop be a blessing in disguise and represent an opportunity to buy while the stock is undervalued? 🤷♀️ 

Earnings Power: StoneCo continues to generate robust revenue, with retail deposits up 42% YoY and a nearly fourfold expansion in credit services. 💵 With a forward P/E ratio of 8x, the stock might be undervalued, especially considering its strong fundamentals. 📉

Solid Market Share: StoneCo remains one of the leaders in Brazil’s fintech market, especially with the rise of PIX, Brazil’s instant payment system. While concerns about market saturation are real, StoneCo believes there’s still plenty of room for growth. 💳

Key Risks to Keep in Mind 🚨

• Competition: Neobanks, new merchant acquirers, and established players like Mastercard and Visa could pose a challenge. 💳

• Market Saturation: While electronic payments have reached over 90% of personal consumption expenditure (PCE), StoneCo sees untapped potential in intermediate consumption. 📉

• Economic Conditions: Brazil’s high inflation and steep interest rate hikes might add some volatility to the mix. 🇧🇷💸

The Bottom Line: Should You Bet on StoneCo? 🤷♀️📈

StoneCo might not be the sexiest stock in the fintech space, but it’s certainly a contender. The company has decent growth numbers, a significant market share, and a solid track record. It’s hard to ignore the long-term value at play, especially when the stock seems to be trading at a discount.

Final Thoughts: StoneCo has the potential to be a game-changer in the digital payment space, especially if it keeps executing on its strategic priorities. While it’s not without risks, the upside might be too good to ignore—if you’re in it for the long haul. ⏳

Disclaimer: As always, remember to take everything with a pinch of salt (and maybe a touch of salsa). 🧂😉