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    Can StoneCo’s (STNE) Settlement Reshape Market Trust in Its Risk Management Practices?

    Simply Wall St·09/06/2025 13:31:29
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    • StoneCo recently agreed to pay a settlement to STNE investors, resolving claims that it misled the market about the safety, profitability, and collectability of its merchant credit product between March 2020 and November 2021.
    • This settlement follows revelations that nearly half the loan portfolio was non-performing, raising questions about the company's prior risk management disclosures.
    • We’ll examine how the investor lawsuit settlement over credit product misstatements could influence StoneCo’s long-term growth and credibility.

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    StoneCo Investment Narrative Recap

    To be a StoneCo shareholder, one has to believe in the company’s potential to capitalize on Brazil’s shift from cash to digital payments, using its scale to broaden financial solutions and grow recurring revenues. The recent settlement of investor claims tied to loan portfolio disclosures could have short-term impacts on market trust, but does not appear to directly affect the biggest near-term catalysts, such as operational efficiency and digital payment growth; the most significant risk now lies with ongoing credit quality and portfolio management, especially after recent heightened scrutiny.

    Among StoneCo’s recent moves, the expanded share buyback program stands out following the settlement. This action signals that management sees value in the current share price, and it aligns with the catalyst of returning capital to shareholders while potentially supporting earnings per share, even as other areas of the business continue to evolve.

    But for all the focus on growth, there’s a risk investors should not ignore, especially around the sustainability of the credit portfolio, given heightened...

    Read the full narrative on StoneCo (it's free!)

    StoneCo's narrative projects R$17.4 billion in revenue and R$5.0 billion in earnings by 2028. This requires 8.2% yearly revenue growth and a R$6.3 billion earnings increase from the current R$-1.3 billion.

    Uncover how StoneCo's forecasts yield a $16.94 fair value, in line with its current price.

    Exploring Other Perspectives

    STNE Community Fair Values as at Sep 2025
    STNE Community Fair Values as at Sep 2025

    Eight different fair value estimates from Simply Wall St Community members range widely, from R$13.63 to R$29.98 per share. With ongoing questions about credit risks, your view of the company’s future could be shaped as much by what you believe about portfolio quality as by recent settlements, explore the full set of perspectives to compare your outlook.

    Explore 8 other fair value estimates on StoneCo - why the stock might be worth as much as 73% more than the current price!

    Build Your Own StoneCo Narrative

    Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.