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StoneCo: A Rising Star in the Brazilian Fintech Landscape
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StoneCo stands out in the Brazilian fintech sector with its market capitalization of around $5 billion. Demonstrating an impressive 7-year revenue CAGR of roughly 60%, having Berkshire Hathaway as a major shareholder, and sharing numerous business parallels with other Latin American success stories like MercadoLibre and Nubank, StoneCo is undoubtedly a company to keep on your radar. This article delves into StoneCo's history, offerings, and growth trajectory, highlighting why it's a company deserving attention.
Key Insights
Rapid growth: With a market capitalization of $5 billion, StoneCo has achieved a remarkable 7-year revenue growth CAGR of roughly 60%.
High-profile backers: StoneCo has attracted renowned investors as shareholders like Berkshire Hathaway and the Walton family, showcasing its potential.
Foundational change in Brazilian fintech: Founded in 2012 following a pivotal decision by the Brazilian Central Bank in 2010 to open the financial services sector, StoneCo capitalized on this opportunity, contributing to Brazil's evolution into a significant fintech hub.
Innovative and focused business model: StoneCo offers a comprehensive suite of payment solutions, banking services, and credit facilities, with a particular focus on small- and medium-sized enterprises (SMEs) in Brazil.
Founding Story
StoneCo was founded in 2012 by Eduardo Pontes and André Street. Its inception was closely tied to a crucial change in the Brazilian financial services industry. In 2010, the Brazilian Central Bank took a groundbreaking step to break a longstanding duopoly in the sector, consequently opening the market to new entrants like StoneCo. This move was pivotal in transforming Brazil into a significant fintech hub.
Pontes and Street, inspired by Jack Dorsey's Square, revolutionized how Brazilian businesses manage payments. Their innovative approach attracted heavyweight investors, including Berkshire Hathaway, Jack Ma, and the Walton family, making the founders billionaire before reaching 40.
What Does StoneCo Offer?
StoneCo's suite of payment solutions caters to a wide range of business needs. The company offers advanced payment processing, banking services, and credit facilities, focusing on the digital commerce needs of merchants and integrated partners across various channels.
A key to StoneCo's rapid growth is its emphasis on small- and medium-sized enterprises (SMEs) in Brazil, a segment that had previously been largely underserved. Its mission, resonating with Shopify's philosophy of "Arming the Rebels," is centered on empowering Brazilian entrepreneurs.
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Consistent Growth and StoneCo's Stock Performance
Since its 2018 IPO, StoneCo has increased its revenue by 5.5 times and its EBIT by 5 times, based on a trailing twelve-month basis as of Q3 2023. Despite this growth, its stock has seen a significant reduction since its trading debut. This discrepancy suggests potential underappreciation in the market, indicating that it might be worth taking a closer look for investors.
Investor Day and Information Accessibility
For those seeking a deeper understanding of StoneCo, the company's comprehensive 2023 Investor Day offers tons of valuable insights. This Investor Day is available on Quartr Pro, which also hosts all other investor relations material from StoneCo and 9,000 other public companies. With powerful features such as AI-summarized Q&As and having the public markets in one search engine, Quartr Pro is a service worth exploring for both financial analysts and investor relations professionals.
Why are finance professionals around the world choosing Quartr Pro?
With a broad global customer base spanning from equity analysts, portfolio managers, to IR departments, the reasons naturally vary, but here are four that we often hear: