StoneCo: Revs Up 113%, NI Up 646%

Crazy good numbers from “South America’s Paypal”.…

Revenues up 113%
Net Income up 646%

Customers up 104%

STNE is one of my Core Stocks, meaning I see no reason why it won’t go up 10X from current…for patient investors.

My other Core Stocks: TTD (23.9% of portfolio), TWLO (8.8%), MDB (6.0%, AYX (7.0%).

I have a couple other high allocation companies, but I don’t see 10X in the future for them: NFLX (9.0%), ANET (6.6%), AMZN (5.4%).

Obviously, I like STNE quite a bit. Lots of details in the above link, but I’m taking my Sweetie out for her birthday and just don’t have the time. :slight_smile:

Rule Breaker / Market Pass Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.


Yes, good numbers.

Its a double for me now in 2.5 months, sitting tight.

Not all “foreign” stocks are scams.

Tencent Music (TME) reports tomorrow.




Crazy good numbers from “South America’s Paypal”.

Not to confuse Brazil with South America. From the link:

We are on track with our plans operationally and financially and are excited to continue to expand our business by increasing our penetration in Brazil´s more than 5,000 cities through our hub strategy and providing our clients with a complete set of products and best in-class service.

Earlier I looked at Mercado Libre and discovered that in each country they operate in it’s a separate company. If I were to sign up in Venezuela I could not operate in any other country, I would have to create an account in each country. Also, you can only operate in the country’s currency none of which is universally accepted like US dollars.

I’m not saying anything bad about StoneCo, only not to confuse Brazil with South America.

Denny Schlesinger


Agreed Denny, but StoneCo is planning to expand its business in other S. American countries.




Its a double for me now in 2.5 months, sitting tight.

It’s only up 85% in just over a month for my first position, bummer :wink:, less (but not much) for the my next 2 lots I bought. As it had a limited history, I wanted to see this report before making it a position on par with my other high growth, high conviction stocks, I’ll be adding over the next few months to do that. You just can’t beat triple digit growth!

And thanks again, GM, for getting me into this one!


Loved the quarter and the guidance. After the 15% jump tomorrow STNE will jump from 4th into atleast 3rd.

Twlo 20%
Ayx. 17.3%
STNE 17.0%*
TTD. 16.6%
ZS. 13%
MDB. 11%
Okta 5.1%

thank you for reminding me of this one. Not sure why I took it off the watchlist.
Probably over concern on competition…PAGS?

Obviously their performance is solid per the ER…any thoughts on their competition and why STNE should do better? Or is it just simply there can be multiple winners here?

This is what STNE put in their previous Q ER:
"Given recent discussions about the competitive environment in Brazil, we believe it is important to share some thoughts regarding how the Company positions itself:

The SMB market in Brazil is very competitive and we have been facing competition with incumbents since day one. We were born in a constantly changing environment and we are a very dynamic organization, with the right team, culture, technology and innovation capabilities not only to adapt to market changes but also to drive those changes ourselves, as we have been doing for the last six years.

We believe competition is positive for the market, especially for those who matter the most: the merchants. The Brazilian regulators and antitrust authority have been successfully fostering competition and innovation in the country. This has allowed players like ourselves to enter the market and set higher standards at more fair prices for merchants. We are very happy to have contributed to market changes that have improved the ability of our clients to grow and manage their business more effectively over time.

We will always monitor competition very closely. However, our commitment is towards our clients. Our actions are driven by our client´s needs and our priority will be to continue to listen to them and to provide them with a superior value proposition.

Our performance so far in the fourth quarter 2018 in terms of growth, operational leverage, profitability and take rate has been strong and on track. The Company’s strategy of having the best customer experience, a disciplined execution and being very close to the clients has been paying off. Looking to the balance of 2018 and beyond, we are excited about the breadth of opportunities available to us to continue to expand our business, offer more solutions to merchants and build long-term shareholder value."



Cheers Foodles!

I just brought this to the board but you did all the work and invested, so credit goes to you.

Must admit, never thought it’d double in 2.5 months!

Keep an eye on BZUN, HUYA, IQ and TME.



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Fintech and e commerce penetration are very low in S. America.

StoneCo’s customer service is top notch and its rolling out multiple SaaS offerings to hook its customers (like Square).

Its take rate went up last quarter to 1.88% so it is doing something right.

No. of clients hss almost doubled to 267,900 and Ant Financial, Berkshire Hathaway, Walmart Family and Jorge Paulo Lemann are shareholders, founders with skin in the game are still running the show.

Despite a double since January, itz still trading at forward PEG of 1.15!




PAGS and STNE are both good companies. PAGS is about a year ahead of you look at their 2017 numbers vs STNE 2018 numbers. The law of large numbers makes the 52% growth @ PAGS look comparatively less impressive but it is off a much larger base.…

Their charta traded in sync for a while, with volume favouring STNE.…

The STNE chart has looked like the mother of all inverse head and shoulders ready to break out. And it has.

Am long both.

There is a difference in their target markets (PAGS is more micro businesses and STNE more SMBs). Different take rates (higher at PAGS) gross margins (better at STNE) . I don’t think it is a zero sum game, but MELI plays here too.

  • Thanks, Denny, for the detail on “South America” vs Brazil.

  • I left off some details: STNE is…no, was…6.2% of my portfolio and is 100% shares. I see that it’s up 20% after hours. That’ll jiggle my allocations slightly.

  • Additional disclosure: PAGS is 1.2% of my portfolio. It is about 50% $27.50 January 2020 calls and 50% shares. They are doing well too, as a company. Growing “only” ~30%, but PE is only 25 (given after hours price of $30). It’s probably worthy of more of my dollars. :slight_smile:

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Agreed Tchalla - am long both MELI and STNE - both have risen sharply post ER.

Good luck with your PAGS position.

Considering Dec is amid a holiday season and they let the sales ppl taking off last week of Dec/1st week of Jan and still get very good customer growth, that’s reassuring.

They commented they do NOT compete on price (I suppose b/c they could offer package of services instead of onesies and twosies). In addition, they are not pursuing micro merchant market aggressively b/c lower margin potential.

Just finished reviewing StoneCo’s ER slide deck -

Company currently has 5.6% market share of merchant acquisition/payment processing in Brazil but estimates that its banking, credit and Saas TAM is 5 times larger than the merchant acquisition market!

I suspect this stock will be north of $100 within a few years. May increase my position today.

I suspect this stock will be north of $100 within a few years. May increase my position today. – GM

Looking at Yahoo! STNE statistics and the STNE earnings report, it appears that 2018 EPS was around $1. Given the revenue growth rate and the likely continued expansion of margins (although not likely as fast as this most recent quarter!), I can imagine $100 will arrive sooner than you or I expect.

I plan to keep re-assessing every quarter, like every other holding. We’ll see.

Rule Breaker / Market Pass Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

The total number of clients more than doubled to 267,900 by year’s end. Total payment volume jumped 74% to 26.6 billion reals.

While it serves merchants, StoneCo also sells its solutions to integrated partners such as payment service providers. It also has hubs near customers that include an integrated team of sales, service, and operations support staff.

Management said during the earnings call that they are encouraged by regulatory activity in industry and plan to upsell products to merchants. They also said there is huge headroom to go in merchant acquiring, as they have just a 6% share in market with just under 30% credit card penetration.

Management added that so far this year they are performing “according to plans.” They said the business is improving in all areas and that they are “very happy” with the results so far in 2019, and that this will be reflected in their margins.

However, investing in an IPO stock is never without risks. JPMorgan analyst Domingos Falavina, who was rating StoneCo stock as neutral with a 22 target, has warned it faces competitive threats from incumbents. He also said the firm has higher dependence on prepayment revenue compared to incumbents.

But there are upside opportunities for the stock too, such as customer stickiness due to software usage; and multiple convergence to peers such as Square (SQ) or PayPal (PYPL), which trade at significant premiums.

Another plus for the IPO stock is Brazil’s political and economic climates are improving. President Jair Bolsonaro, who won a runoff election on Oct. 28, took office in January with a pro-market agenda.

Last month, economy minister Paulo Guedes promised to end years of failed state interventions in Latin America’s largest economy.

I was thinking this IPO was too new to get into, but you guys have confirmed my feeling that I should get a starter position, even after post earnings jump. Oddly, Warren Buffet had an early position, which is not usually in our universe of higher growth stocks.


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Do they not provide a forecast…or did i miss it in the press release and cc transcript?

Do they not provide a forecast…or did i miss it in the press release and cc transcript? – Dreamer

I didn’t see it either. Nor did I see anything to break earnings into EPS. I had to derive that one.

Maybe the conference call will include a forecast, but I kind of hope they don’t give one. Just let the results speak for itself… which is definitely not the norm for US companies. LOL.

I think any guesses we might come up with would just be kidding ourselves given the paucity of data points. Especially given the optionality the company has, providing increasing ways the company can grow. I prefer to just sit back and watch the quarterly results and not obsess about it… since there is no reasonable alternative at this early stage.

Rule Breaker / Market Pass Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

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On the SA transcript when asked about competition potentially hurting them in Q1 they give following insight into Q1. In short, they are “very happy” with how things are going. They don’t see a slow down and further it seems in Q4 they gave their staff time off for a week at the end of Dec and a week beginning of Jan. Not sure if everyone got 2 weeks off or it was spread out during this time, and there’s some likely typos of the transcription, but I was taking this to mean they had great results despite this and Q1 won’t have such a break in productivity. As to actual numbers/forecast I didn’t see anything either.


Rafael Martins

Hi, Domingos, Rafael here. Thank you very much for the question. So, regarding the first quarter, just to be clear, we aren’t seeing our growth plans, and I mean, be hindered by competition. We are not making specific comments on any metric of the first quarter. But what I can tell is that the first quarter started strong with our growth plans on track with our operational metrics on track and that’s why we don’t see any relevant news, anything on that – on that regard. So, I’m just going to have to be disciplined here not to comment any specific metric, but that’s our comment. That’s all we have.

Thiago Piau

Just to compliment that Domingos. So, as we said, a churns in the fourth quarter compared to third quarter decreased 10%. in first quarter, we are very happy to see the operational metrics that we have. And the most important thing is that – the way that we measure our productivity, it’s basically number of active clients added by sales personnel per working day. So keep in mind that in the fourth quarter, you have holidays with Christmas and New Year’s Eve and we did collective vocation to our sales force in the last week of December and first week of January mainly, because that’s the least productivity time of the year. So, when we adjust the net new wedge per work today. We see that our productivity went up by almost 10% in the fourth quarter of 2018. and we keep within our plans regarding growth for first quarter. So, we are very confident with the results of first quarter.

I’ve now gone through the ER call -

TOTAL TAM for merchant acquiring/payments is BRL 40 billion

TAM for banking/credit/software services is around BRL 140 billion

Management expects to secure 25-30% market share (current share = 6%)

The volume of payments in Brazil is increasing by 20-25% per year

If one assumes that StoneCo manages to secure 15% market share at maturity, at today’s FX rate, we’re looking at ARR of (15% of BRL 140 billion) around US$5 billion.

Assuming 30% margin, at Brazilian market maturity, we get to a net profit of around $1.5 billion.

Payment processing companies typically trade around 20-22 times earnings but if we assign a 25 multiple on $1.5 billion profit (slightly higher multiple due to SaaS recurring revenue/banking and credit services), we get a market cap of US$37.5 billion (versus US$11 billion now).

Company management has said that it will expand into other S. American nations but to remain conservative, lets just ignore the international opportunity altogether.

So, using conservative estimates, we are looking at a triple from here or the stock climbing to $120-125 within a few years.

All of this looks good but my one big reservation is currency risk - after all, S. America is well known for currency crises and macro/political turmoil. Given this very real risk, I’m not going to add to my 8.5% position.

I hope the above has been useful.