Why StoneCo Stock Is Sinking 34% Today

Shares of Brazil's digital payments technologist StoneCo (NASDAQ: STNE) sank 34% Wednesday as of 12:40 p.m. ET. The steep tumble comes following the third-quarter earnings update. Revenue of 1.47 billion Brazilian reais ($270 million) was up 57% year over year, but the fintech company reported a 1.26 billion reais ($230 million) net loss due to a write-down on fair value of investments. Excluding non-cash items, adjusted net income in Q3 was positive 133 million reais ($24.1 million).

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Stone's investment write-down is due to its investment in Banco Inter. In the second quarter of this year, Stone invested a 4.99% stake in the digital lender as part of a plan to woo over the bank's customers to the StoneCo payments platform. A non-cash investment gain of 841 million reais ($154 million) was logged in that quarter, but the investment turned against Stone in Q3 as Brazil's economy struggled and Banco Inter stock tanked. The Q3 non-cash loss on investment was 1.34 billion reais ($240 million).

Source Fool.com