STNE - StoneCo Q4 Earnings: I Made A Mistake (Rating Downgrade)

2024-03-19 04:39:35 ET

Summary

• StoneCo's results reveal that it is more of a bank than a fintech, impacting its valuation and investment potential.
• The company's near-term prospects appear promising, driven by strategic initiatives and strong financial performance.
• StoneCo faces challenges in managing loan loss provisions, which may affect its profitability and valuation as its growth becomes tied to balance sheet risk.

Investment Thesis

StoneCo's ( STNE ) Q4 2023 results took investors by surprise. It certainly took me. I was looking at StoneCo as a fintech and valuing it as such. But with time, StoneCo has become more of a bank with associated credit risk and less of a fintech....

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