Brazilian fintech company StoneCo is tapping into two of the biggest global megatrends — e-commerce and payment technology.
STNE (StoneCo Ltd) IPO 24 dollars, 52 wk range: 16.14–44.21
In many parts of Latin America, the majority of consumers don’t have a credit card, nor even a checking account. In a region where online shopping is just beginning to gain steam, StoneCo is empowering vendors to make the move into e-commerce. By focusing on small- and medium-sized businesses, its attracting a growing cadre of merchants — and customers.
Warren Buffett’s Berkshire Hathaway was an early investor in StoneCo, picking up an 11% stake when the company went public in October 2018 — a huge vote of confidence in this young company.
Berkshire Hathaway invested $340 million to acquire 14,166,748 Class A shares of StoneCo in conjunction with its IPO, at about $24 per share. A report in The Wall Street Journal revealed that it wasn’t actually Buffett, but Todd Combs — one of Buffett’s portfolio managers — who was responsible for selecting the company.
StoneCo said in its registration statement that it’s already the fourth-largest payment processor in Brazil in terms of total payment volume, an impressive feat for a company of its size.
4Q18 Revenue increased 114% year over year to $140 million, while adjusted net income grew 646% to $41 million. Total payment volume — the total payments made by customers on its platforms — soared to more than $7 billion, up 74% year over year. The number of active clients more than doubled to 268,000.
Chart shows early investors got in 22–24 (roughly same as the IPO price), those who added on earnings got an entry at 30–33.
Assuming profit taking ensues — Best case scenario add near 33 but watch this name as even 36 below wont be a problem to position in a business growing revenues, clients 100% yoy. Current marketcap is 11.5B dollars.
Strong Sector- Brazil names
Rival Brazilian payment stock PagSeguro Digital (PAGS). PagSeguro stock, which came public in early 2018, reported strong earnings late last month. MercadoLibre (MELI), an Argentina-based e-commerce giant across much of Latin America, reported much better-than-expected earnings last week. MercadoLibre (Mercado Pago) stock surged 21% for the week.
PAGS IPO — 21.50 Jan 24 2018
The company provides online and in-store payment services, including mobile services, for small businesses in Brazil. The company launched in 2006 as an online payment platform to provide the digital payment infrastructure necessary for e-commerce to grow in Brazil.
During its fiscal third quarter, PagSeguro reported revenue of $217 million, an increase of 139% from the year-ago period, with adjusted earnings of 14 cents a share, up 250%.
PagSeguro is owned by Brazil-based UOL, which controls 95.8% of voting shares and says it will control “all matters requiring shareholder approval.” Founded in 1996, UOL says it’s Brazil’s largest internet content, digital products and services company
PagSeguro’s revenue for the fourth quarter came in at $336.9 million after converting from Brazilian currency to U.S. dollars, topping the company’s own guidance and the average analyst estimate for revenue of $332.5 million. Sales for the period were up roughly 52.5% year over year when not adjusted for currency, total payment volume climbed 80.7%, and net income for the quarter rose 60.6%.
The company closed out 2018 with 4.1 million merchant partners, up from 2.8 million at the end of 2017. That’s impressive customer growth, and taken in conjunction with other promising signs from PagSeguro’s recent earnings report, it looks like the business is heading in the right direction.
PAGS- Best Chart Entry 26 -24; Currently 28.91
MELI IPO 18.00- Aug 2007 — approximately 30X at 540 dollars since IPO. Yes its a 3000% increase from IPO days.
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