Citi Downgrades StoneCo to Neutral Amid Business Fragility
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 15 2026
0mins
Source: seekingalpha
- Rating Downgrade: Citi has downgraded StoneCo (STNE) from Buy to Neutral/High Risk and placed a 90-day downside Catalyst Watch on Friday, indicating concerns over the fragility of its standalone merchant acquiring business model.
- Underperformance: Analyst Gustavo Schroden noted that StoneCo's Q4 volume growth of only 5% year-over-year significantly lagged behind the industry's 9% growth, accompanied by declining take rates, highlighting increasing competitive pressures in the market.
- Deteriorating Asset Quality: The company's 90+ days nonperforming loans worsened by 180 basis points quarter-over-quarter, indicating rapid asset quality deterioration that could further constrain profitability in the coming years, despite efforts to boost credit performance.
- Market Reaction: Following the downgrade, StoneCo's stock edged down 0.2% in Friday morning trading, reflecting investor concerns and a cautious outlook regarding the company's future growth prospects.
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Analyst Views on STNE
Wall Street analysts forecast STNE stock price to rise
3 Analyst Rating
3 Buy
0 Hold
0 Sell
Strong Buy
Current: 11.330
Low
20.00
Averages
22.00
High
25.00
Current: 11.330
Low
20.00
Averages
22.00
High
25.00
About STNE
StoneCo Ltd. is a provider of financial technology and software solutions. The Company designed its cloud-based technology platform, namely the Stone Business Model, for its clients to connect, get paid, and grow their businesses. Its segments include financial services and software. In financial services, it offers payments, digital banking, and credit solutions, focused mainly on Micro, Small, and Medium Businesses (MSMBs). In software, it offers Point of Sale (POS) and Enterprise Resource Planning (ERP) solutions for different retail and service verticals, Customer Relationship Management (CRM), engagement tools, electronic commerce, and order management system solutions. It also provides digital product enhancements to help its merchants improve their consumers' experience, such as its split-payment processing, multi-payment processing, recurring payments for subscriptions, and one-click buy functionality. It provides its clients with store, life, and health insurance solutions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
StoneCo (STNE) Q1 2026 Earnings Transcript
See More
StoneCo Reports 6% Revenue Growth Amid Challenges
- Revenue Growth: StoneCo Ltd reported total revenue and net income of BRL 3.6 billion, reflecting a 6% year-over-year increase, primarily driven by the expansion of credit revenues and healthy profitability in payments, indicating the company's resilience in a competitive market.
- Shareholder Returns: The company has distributed BRL 3.6 billion to shareholders year-to-date, representing a 27% distribution yield, showcasing a strong commitment to returning capital to shareholders while reflecting stable cash flow and profitability.
- Credit Product Expansion: StoneCo is launching secured credit products, which are expected to deepen relationships with merchants and reduce portfolio risk intensity, a strategy that will help enhance customer loyalty and drive future revenue growth.
- Macroeconomic Challenges: Despite revenue growth, the macroeconomic environment continues to weigh heavily on smaller merchants, with rising non-performing loans (NPLs) leading to increased provisions for credit losses, highlighting the pressures the company faces in risk management.
See More
Citi Downgrades StoneCo to Neutral Amid Business Fragility
- Rating Downgrade: Citi has downgraded StoneCo (STNE) from Buy to Neutral/High Risk and placed a 90-day downside Catalyst Watch on Friday, indicating concerns over the fragility of its standalone merchant acquiring business model.
- Underperformance: Analyst Gustavo Schroden noted that StoneCo's Q4 volume growth of only 5% year-over-year significantly lagged behind the industry's 9% growth, accompanied by declining take rates, highlighting increasing competitive pressures in the market.
- Deteriorating Asset Quality: The company's 90+ days nonperforming loans worsened by 180 basis points quarter-over-quarter, indicating rapid asset quality deterioration that could further constrain profitability in the coming years, despite efforts to boost credit performance.
- Market Reaction: Following the downgrade, StoneCo's stock edged down 0.2% in Friday morning trading, reflecting investor concerns and a cautious outlook regarding the company's future growth prospects.
See More
StoneCo Surges on Strong Q1 Earnings and Payment Volume
- Earnings Growth: StoneCo's adjusted EPS for Q1 rose 15.4% year-over-year to R$2.19, despite a 20.8% decline from the prior quarter, indicating sustained profitability post-share buybacks.
- Revenue Performance: Total revenue increased 6.5% year-over-year to R$3.58B, surpassing the Visible Alpha consensus of R$3.54B, reflecting enhanced contributions from credit products, although it declined 4.0% sequentially due to seasonal factors.
- Payment Volume Increase: Total payment volume grew 2.7% year-over-year to R$137.2B, significantly exceeding analyst expectations of R$112.77B, despite a 9.0% sequential decline, highlighting challenges in the macroeconomic environment for smaller merchants.
- Market Reaction: Despite Goldman Sachs downgrading the stock ahead of the Q1 earnings release, StoneCo's shares surged 8.03% in after-hours trading to $10.43, reflecting a positive investor response to the earnings report.
See More
Goldman Sachs Downgrades StoneCo Rating, Shares Decline
- Rating Downgrade Impact: Goldman Sachs downgraded StoneCo's stock from Buy to Neutral, anticipating weaker earnings momentum, which led to a 4.63% drop in shares to $11.12 during Wednesday morning trading, reflecting market concerns about the company's future performance.
- Weak Performance Expectations: Analysts noted that StoneCo's Total Payment Volume (TPV) is underperforming, with a projected 1% year-over-year decline in 2026, resulting in market share losses, particularly compared to main competitor PagSeguro Digital (PAGS).
- Increased Valuation Pressure: Despite a 7% year-to-date decline in StoneCo's 12-month forward P/E ratio, Goldman Sachs sees limited room for multiple expansion due to decelerating results, projecting a 6% downside to the Visible Alpha consensus for 2026 net income.
- Cash Dividend Impact: The research note highlights that StoneCo is currently trading without one of its main catalysts, the R$3 billion excess cash from the Linx divestiture completed in February 2026, which will be distributed as extraordinary dividends on May 4, further affecting investor confidence.
See More
Uber Commits $10 Billion to Acquire Autonomous Vehicle Fleet
- Strategic Shift: Uber has announced a commitment of over $10 billion to acquire thousands of autonomous vehicles, marking a significant transition from its 'asset-light' model to owning a fleet, aimed at countering threats from competitors like Waymo and Tesla.
- Market Response: This move not only surpasses last year's $9.8 billion in free cash flow but also demonstrates Uber's determination in the autonomous driving sector, with plans to launch robotaxi services in 15 cities, further solidifying its market position.
- Partnerships: Uber's investment will involve collaborations with companies like Lucid, Rivian, and China's Baidu, aiming to ensure supply chain stability and enhance its competitiveness in the autonomous driving market.
- Financial Pressure: While this investment may increase financial burdens, analysts view it as a necessary step for Uber to adapt to market changes and achieve long-term growth, especially in competition with giants like Amazon and Alphabet.
See More
StoneCo (STNE) Q1 2026 Earnings Transcript
See More
StoneCo Reports 6% Revenue Growth Amid Challenges
- Revenue Growth: StoneCo Ltd reported total revenue and net income of BRL 3.6 billion, reflecting a 6% year-over-year increase, primarily driven by the expansion of credit revenues and healthy profitability in payments, indicating the company's resilience in a competitive market.
- Shareholder Returns: The company has distributed BRL 3.6 billion to shareholders year-to-date, representing a 27% distribution yield, showcasing a strong commitment to returning capital to shareholders while reflecting stable cash flow and profitability.
- Credit Product Expansion: StoneCo is launching secured credit products, which are expected to deepen relationships with merchants and reduce portfolio risk intensity, a strategy that will help enhance customer loyalty and drive future revenue growth.
- Macroeconomic Challenges: Despite revenue growth, the macroeconomic environment continues to weigh heavily on smaller merchants, with rising non-performing loans (NPLs) leading to increased provisions for credit losses, highlighting the pressures the company faces in risk management.
See More
Citi Downgrades StoneCo to Neutral Amid Business Fragility
- Rating Downgrade: Citi has downgraded StoneCo (STNE) from Buy to Neutral/High Risk and placed a 90-day downside Catalyst Watch on Friday, indicating concerns over the fragility of its standalone merchant acquiring business model.
- Underperformance: Analyst Gustavo Schroden noted that StoneCo's Q4 volume growth of only 5% year-over-year significantly lagged behind the industry's 9% growth, accompanied by declining take rates, highlighting increasing competitive pressures in the market.
- Deteriorating Asset Quality: The company's 90+ days nonperforming loans worsened by 180 basis points quarter-over-quarter, indicating rapid asset quality deterioration that could further constrain profitability in the coming years, despite efforts to boost credit performance.
- Market Reaction: Following the downgrade, StoneCo's stock edged down 0.2% in Friday morning trading, reflecting investor concerns and a cautious outlook regarding the company's future growth prospects.
See More
StoneCo Surges on Strong Q1 Earnings and Payment Volume
- Earnings Growth: StoneCo's adjusted EPS for Q1 rose 15.4% year-over-year to R$2.19, despite a 20.8% decline from the prior quarter, indicating sustained profitability post-share buybacks.
- Revenue Performance: Total revenue increased 6.5% year-over-year to R$3.58B, surpassing the Visible Alpha consensus of R$3.54B, reflecting enhanced contributions from credit products, although it declined 4.0% sequentially due to seasonal factors.
- Payment Volume Increase: Total payment volume grew 2.7% year-over-year to R$137.2B, significantly exceeding analyst expectations of R$112.77B, despite a 9.0% sequential decline, highlighting challenges in the macroeconomic environment for smaller merchants.
- Market Reaction: Despite Goldman Sachs downgrading the stock ahead of the Q1 earnings release, StoneCo's shares surged 8.03% in after-hours trading to $10.43, reflecting a positive investor response to the earnings report.
See More
Goldman Sachs Downgrades StoneCo Rating, Shares Decline
- Rating Downgrade Impact: Goldman Sachs downgraded StoneCo's stock from Buy to Neutral, anticipating weaker earnings momentum, which led to a 4.63% drop in shares to $11.12 during Wednesday morning trading, reflecting market concerns about the company's future performance.
- Weak Performance Expectations: Analysts noted that StoneCo's Total Payment Volume (TPV) is underperforming, with a projected 1% year-over-year decline in 2026, resulting in market share losses, particularly compared to main competitor PagSeguro Digital (PAGS).
- Increased Valuation Pressure: Despite a 7% year-to-date decline in StoneCo's 12-month forward P/E ratio, Goldman Sachs sees limited room for multiple expansion due to decelerating results, projecting a 6% downside to the Visible Alpha consensus for 2026 net income.
- Cash Dividend Impact: The research note highlights that StoneCo is currently trading without one of its main catalysts, the R$3 billion excess cash from the Linx divestiture completed in February 2026, which will be distributed as extraordinary dividends on May 4, further affecting investor confidence.
See More
Uber Commits $10 Billion to Acquire Autonomous Vehicle Fleet
- Strategic Shift: Uber has announced a commitment of over $10 billion to acquire thousands of autonomous vehicles, marking a significant transition from its 'asset-light' model to owning a fleet, aimed at countering threats from competitors like Waymo and Tesla.
- Market Response: This move not only surpasses last year's $9.8 billion in free cash flow but also demonstrates Uber's determination in the autonomous driving sector, with plans to launch robotaxi services in 15 cities, further solidifying its market position.
- Partnerships: Uber's investment will involve collaborations with companies like Lucid, Rivian, and China's Baidu, aiming to ensure supply chain stability and enhance its competitiveness in the autonomous driving market.
- Financial Pressure: While this investment may increase financial burdens, analysts view it as a necessary step for Uber to adapt to market changes and achieve long-term growth, especially in competition with giants like Amazon and Alphabet.
See More
