✦ The Selic ProblemThin moat

StoneCo is unusually honest about a vulnerability most companies bury: its earnings move with Brazilian interest rates, and not in its favour. Management has quantified it precisely — every 100 basis points on the Selic rate carries a pre-tax impact of roughly R$200-250 million — and cited rates staying higher for longer as the reason 2026 guidance of R$6.6-7.0 billion in adjusted gross profit and R$10.80-11.40 of adjusted EPS is tracking toward the lower end¹.

The mechanism is prepayment. A large share of StoneCo's revenue comes from advancing merchants their card receivables early, and funding those advances costs whatever Brazil's policy rate says it costs. High rates squeeze the spread from both directions: funding is dearer, and merchants under pressure borrow differently. It is the clearest illustration of why this business, for all its technology, is partly a financial one.

The bet, such as it is, runs the other way: Brazil's rate cycle has always turned eventually, and a company earning these returns at a punishing Selic would earn considerably more at a normal one. That is a real source of upside that requires nothing from management — and equally, a company whose profits depend on the central bank has that much less of a moat. Watch the Selic path against reported gross profit, and watch whether StoneCo's non-prepayment revenue grows fast enough to make the sensitivity smaller over time.