Why PagSeguro Cratered Today
Shares of Brazilian fintech PagSeguro Digital (NYSE: PAGS) plummeted today, down 19.2% as of 12:52 p.m. ET.
PagSeguro reported earnings this morning, and while the company continued to show strong top-line growth, its margins have compressed quite a bit. That's because Brazil's economy has seen really bad inflation and skyrocketing short-term rates, which affects PagSeguro's cost base. With investors now focusing more on profitability and pricing power as interest rates rise, the result wasn't what they had hoped for.
At first glance, PagSeguro's results didn't look bad at all. After all, revenue rose 66% (in Brazilian Reals) on the back of 60% total payment volume growth. Furthermore, the payment processor has been steadily growing its PagBank offering, which takes deposits and lends out money to both its merchant clients and consumers. Deposits were up 124% and loans were up 166% during the first quarter. PagSeguro's market share of the Brazilian payments space even increased from 8.9% to 10.6% over the past year.
Source Fool.com
