1 Question StoneCo Has to Answer
After a sharp drop and a similarly dramatic rebound, shares of Brazilian digital payments company StoneCo (NASDAQ: STNE) have given investors a lot to worry about this year. The stock is more or less flat for 2020 through Wednesday's close, which isn't terrible considering the current state of world affairs, but it's trailing behind Latin American e-commerce giant MercadoLibre's (NASDAQ: MELI) massive return of roughly 70% over the same period. Because of shelter-in-place and related orders to try to halt the spread of COVID-19, many digital-based businesses have been doing quite well at the expense of those that rely on in-person interaction. So what gives with Stone?
The answer lies in the industry the company is trying to uproot, which is making its operations look increasingly like a bank's -- albeit a technology-driven, customer-centric bank versus an old and stodgy one. That's a good thing for Stone's customers, Brazil's economy, and ultimately Stone. But new risks are being introduced, and the current crisis could test the war-on-cash outfit's momentum.
Image source: StoneCo.
Source Fool.com
