⚠ The Lesson Was Expensive and the Book Is Growing AgainHigh threat
StoneCo (STNE) — threat to the moat
The rebuilt product is better designed and still unproven — the 2021 version also looked well designed until the environment changed.
The 2021 credit episode cost StoneCo a write-down, a suspended product and a considerable amount of credibility, and the company's account of what went wrong is candid: it lent without adequate collateral registration, without the data infrastructure it thought it had, and into a deteriorating environment.
The rebuild addressed each of those. Loans are secured, sized to observed flow, concentrated on merchants StoneCo also banks, and supported by working-capital and government-guaranteed structures. Cost of risk has been guided down from the low twenties toward the mid-to-high teens.
The uncomfortable part is the timing. The portfolio grew from R$1,207.6 million to R$2,836 million in a single year1. Whatever the design improvements, the great majority of that book has not been through a Brazilian recession, a policy-rate shock, or a bad Christmas for small retailers. The 2021 product also looked well designed until the environment changed.
There is a genuine difference this time, and it is worth stating rather than dismissing: the losses in 2021 came in large part from unsecured lending, and a secured book behaves differently in a downturn — not well, but differently. The provision rising faster than the portfolio suggests the company is reserving with that in mind.
The test is specific. Cost of risk through a full Brazilian credit cycle, not through an expansion. Until the book has seen one, the case rests on the design and on management's word, both of which were also available in 2021.
- ReportedThe credit portfolio grew from R$1,207.6 million to R$2,836 million during 2025, with provisions rising from R$144.5 million to R$389.7 million.StoneCo Ltd. Form 20-F for FY2025 (CIK 1745431) — active payment clients of 4,803.5 thousand at 31 December 2025, against 4,172.7 thousand in 2024 and 3,522.1 thousand in 2023; TPV of R$560.9 billion, against R$516.2 billion and R$438.3 billion; revenue of R$14,153.8 million and adjusted net income from continuing operations of R$2,477.2 million; more than 3.6 million banking active clients, the majority of whom are also payment clients; retail deposits of R$11,091.0 million against R$8,704.8 million and R$6,119.5 million; a credit portfolio of R$2,836 million with expected credit losses of R$389.7 million, against R$1,207.6 million and R$144.5 million a year earlier; clients divided into MSMBs (micro-merchants and SMBs) and Key Accounts, 'comprised of platform services and sub-acquirers'; StoneCo became in 2017 the first non-banking entity authorised by the Central Bank to operate as an Acquirer through a payments-institution licence, and is among the six largest players by total card volume per ABECS; distribution through proprietary and franchised hubs sold on 'service differentiation as the main driver', digital channels, and more than 500 Strategic Partners at December 2025; per the Central Bank, Pix's share of the total number of transactions rose from 1% in Q4 2020 to 52% in H1 2025 and its share of monetary volume from 1% to more than 26%; the filing warns that 'the concentration of our clients by geography and economic sector may increase our risk' and that the company experiences churn from business closures and account transfers; interest rates directly affect both revenue generation and cost of funds, most third-party funding being linked to the Brazilian interbank rate; StoneCo's own analysis notes that US MSMB take rates have been stable over five years despite penetration around 120% of consumption, and finds no indication of saturation-driven price reductions in Brazilian cities with low cash usage — FY2025 · publ. 2026 · source ↗