StoneCo Stock May be Basing Like a Rock


Brazilian provider of point of sale (POS) financial technology. StoneCo (NASDAQ: STNE) Shares have fallen (-54%) to date despite the growth of the three-digit top line. The popular aggregator of electronic and digital payments and e-commerce platform in Brazil not only exceeded its estimates for the first fiscal quarter of 2022, but also raised its outlook for the second fiscal quarter of 2022. Fears of the slowdown Global macroeconomics have slowed stock performance, but the underlying business is strong and growing. The biggest fears of an economic slowdown in Brazil, which recorded 5% GDP growth in 2021, have added to this disconnect between solid fundamentals and weak techniques. Before the pandemic, Brazil was primarily a cash-based economy. The pandemic accelerated migration to e-commerce, but the volatility of the economy has caused stocks to plummet from a pandemic high of $ 95.12 in February 2021 to a low of $ 6.81 in May 2022. The company has 1.7 million more companies. more than 28 million in Brazil, representing a large total addressable market (TAM). Growth is driven by turning more merchants into their platform and services and increasing the total value of payment (POS) as they charge a fee as a percentage of payments. Prudent investors looking for a double-bottomed recovery in the Brazilian economy, which is expected to grow 1.7% in the second quarter of 2022, may look for opportunistic setbacks in StoneCo shares.



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Publication of results for the first quarter of 2021

On March 17, 2022, StoneCo released its fiscal results for the first quarter of 2022 for the quarter ended March 2022. The company reported a profit of BRL 0.43 per share, exceeding consensus estimates of analysts from 0.31 BRL to 0.12 BRL. Revenue rose 138.6% year-on-year (YoY) to BRL 2.07 billion, surpassing analysts ’estimates of BRL 1.19 billion. StoneCo CEO Thiago Piau commented: “The results of the first quarter are the first step in this journey. Our engine of growth, the central pillar of how we integrate and serve our customers, remains strong and we start to see a recovery in margins as evidenced by our first quarter Adjusted EBT margin of 7.9% more than 0.9% in the fourth quarter of 2021. The prudent pricing initiatives we implemented during the fourth quarter have continued gaining strength and the quality of our customer base is improving, as expected “.

Orientation upwards

StoneCo issued an upward guidance for revenue for the second fiscal quarter of 2022 between BRL 2.15 and 2.2 billion compared to consensus analysts ’estimates of BRL 2.02 billion.

Takeaway calls

CEO Piau confirmed that StoneCo is well positioned for strong growth in both major and low lines in 2022. StoneCo was reorganized into two segments of financial services and software. Financial services experienced a 107.8% revenue growth driven by customer monetization initiatives. The company reached an all-time high of BRL 2.1 billion. Revenue strength was driven by new pricing policies for greater customer monetization and accelerated MSM POS growth of 93%. Net customer addition slowed during the quarter due to lower customer turnover. The company expanded its banking platform with transactional products to drive more commitments and additional monetization opportunities. The software segment experienced a 27% growth in the main line driven by 32% growth in core software driven by new sales and a higher price per customer. This also boosted operating leverage with an improved EBITDA margin of 12% compared to 9% a year ago.

StoneCo’s stocks may be basing like a rock

STNE Opportunistic withdrawal levels

We use rifle charts over weekly and daily time periods to provide a short-term perspective of STNE actions. The weekly rifle chart hit bottom at $ 6.81 Fibonacci level (fib). before bouncing. The weekly downtrend is flat with a 5-period moving average (MA) flat at $ 9.62 and a 15-period flat MA at $ 10.18, but may be starting to form a reverse breeding break if l weekly stochastic crosses. Weekly lower Bollinger Bands (BB) bands are at $ 6.27. The weekly Low market structure (MSL) active in a break up to $ 9.67. The downward trend in the daily rifle chart is trying to reverse with a 5-period MA rising to $ 8.35 and a 15-period MA overlapping $ 9.42 and a 50-period MA to 9.38 . The daily stochastic is trying to get a mini puppy to rise to the band of 20 for a manufacturing or breaking setup. Daily lower BBs are at $ 5.79 and higher BBs are at $ 13.36. Prudent investors can monitor opportunistic withdrawal levels at $ 7.75 fiber, $ 7.46 fiber, $ 6.81 fiber, $ 6.24, $ 5.53, $ 4.60 fiber and $ 3.96 fiber . Rising trajectories range from the $ 11.88 fib level to the $ 17.22 fib level.



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