StoneCo: Hitting A Stone Wall Hurts

Summary:

• StoneCo faces challenges from Brazil’s volatile economy and increased competition, leading to a cautious investment stance despite improved fundamentals and valuation.
• The company’s revenue grew 7% yoy, with a 39% yoy EPS increase, but competition and execution issues persist, particularly against the Central Bank’s Pix platform.
• A $350 million share repurchase plan could boost EPS, but STNE must streamline operations and re-accelerate growth to attract bullish investors.

StoneCo (NASDAQ:STNE) is one of the leading Brazilian financial technology companies providing payment solutions for small and medium-sized businesses.

The company experienced a very strong bull-run during the COVID-fueled time frame as companies and consumers around the

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.