✦ The Credit Book, RebuiltNarrow moat

Credit is where a payments company either earns its multiple or loses its shirt, and StoneCo has now done both. The portfolio more than doubled to roughly R$3.8 billion, driven by working-capital loans and government-backed lending, with credit cards, overdraft and secured working-capital products expanding the range¹. The logic is the strongest one in fintech: StoneCo already sees every card transaction its merchants take, which means it can underwrite from observed cash flow rather than from documents, and it can collect by deducting from receivables it already processes.

What makes this a genuine bet rather than a straightforward one is the history. The first attempt, built during the pandemic without adequate collateral or registry infrastructure, produced losses severe enough to force a write-down and a suspension of the product. Everything about the rebuild — secured lending, government guarantees, deliberate pacing — is a response to that.

The number that decides it is cost of risk, which stood at 21.5% with management guiding toward the mid-to-high teens by year-end. Watch it alongside the portfolio size: falling risk cost on a doubling book is the flywheel working, and rising risk cost on a doubling book is the previous cycle repeating with more zeros. Brazilian small-business credit is a genuinely good business when underwritten well and a genuinely dangerous one when growth is the objective.