StoneCo: The Bull Case Just Got Less Predictable (Rating Downgrade)

Bernard Zambonin1.64K FollowersFollow5ShareSavePlay(11min)CommentsSummaryStoneCo's latest print marked a shift in the narrative, with weaker execution in core payments and a more complex, credit-driven growth profile pressuring near-term visibility.The FY26 guidance reset confirmed a slower and less predictable growth trajectory, leading to downward EPS revisions and the end of the recent upward revision cycle.Despite elevated credit risk, underlying economics remain intact, with strong pricing supporting healthy spreads.At ~6–7x forward earnings, the stock looks de-risked, but the key question is whether this reflects temporary 'growth pains' or a structurally lower-quality growth story.Armando Oliveira/iStock via Getty Images My bullish thesis on StoneCo (STNE) before 4Q25 was centered around a top-performing emerging markets fintech that is starting to generate a high ROE of 26%+, with the potential to improve even more. The centralThis article was written byBernard Zambonin1.64K FollowersFollowEquity Research Analyst at DM Martins Research.I cover stocks that are often undercovered, focusing primarily on Brazil and Latin America — but I also occasionally write about global large caps. My work can also be found on TipRanks, where I contribute regularly, and on TheStreet, where I was a frequent contributor in the past.- Disclaimer: All views expressed here are my own and do not necessarily reflect the views or official positions of DM Martins Research. My articles and analyses are for educational and informational purposes only and should not be taken as investment advice. Always do your own due diligence before making any investment decisions.Analyst’s Disclosure: I/we have a beneficial long position in the shares of STNE either through stock ownership, options, or other derivatives. 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.