Can StoneCo's MSMB Momentum Keep Driving Its Growth Story?

StoneCo Ltd.’s STNE efforts this year highlighted its deepening dependence on Brazil’s micro, small and medium-sized businesses. Despite a softer economy and tighter credit conditions, the fintech delivered robust profit and ROE growth through disciplined execution. The divestiture of its software operations leaves StoneCo leaner and more capital-efficient, prioritizing MSMB banking, credit and payments.

Payments remain the engine of StoneCo’s MSMB franchise. Transaction volume (TPV) in this segment climbed 12% year over year to R$122 billion in the June quarter, powered by 59% growth in PIX QR code payments and 6.4% growth in card transactions. 

The active MSMB client base rose 17% to 4.5 million, with nearly 40% of merchants using multiple StoneCo services. Though repricing efforts and weaker same-store sales temporarily slowed growth, management expects MSMB TPV to stabilize at low double-digit rates through year-end.

The banking platform continues to deepen StoneCo’s client stickiness. Active banking users rose 23% year over year to 3.3 million, while deposits jumped 36%. The company has been strategically shifting its deposit mix toward a higher concentration of time deposits, now 83% of the total. Credit is fast becoming StoneCo’s next growth pillar, with the company’s credit portfolio expanded 25% sequentially to R$1.8 billion, with MSMB working capital disbursements up 41%. We expect this trend to continue in the upcoming quarter as well.

StoneCo’s recalibrated business model, leaner, focused and capital-disciplined, appears well-positioned to sustain MSMB-led growth. The company’s ability to cross-sell banking and credit to its merchant base while maintaining prudent risk controls may determine how resilient this momentum remains in a challenging macro landscape.

How Are PagSeguro and MercadoLibre Performing?

Among competitors, PagSeguro Digital Ltd.’s PAGS MSMB TPV rose 2.1% year over year, supported by steady activity across its physical point of sale (POS) channel despite a softer macroeconomic backdrop in the second quarter of 2025. The company continues to expand its SMB client base and POS usage while maintaining solid margins through disciplined repricing.

MercadoLibre, Inc. MELI saw its TPV rising 39% year over year and 61% on an FX-neutral basis to $64.6 billion in the second quarter of 2025. Fintech Monthly Active Users increased 30% year over year to 67.6 million in the second quarter of 2025, marking the seventh consecutive quarter of growth at or above this rate. Engagement with Mercado Pago continues to rise, driven by a strengthening value proposition. MercadoLibre’s performance underscores its strong regional leadership and ecosystem integration across Latin America.

STNE’s Price Performance, Valuation and Estimates

Shares of StoneCo have surged 48.6% in the past three months, outperforming both the broader industry and the S&P 500 composite.

From a valuation standpoint, StoneCo shares are trading cheap, as suggested by the Value Score of B. In terms of forward 12-month P/E, STNE is currently trading at 10.06X, which is below the industry average of 38.98X as well as STNE’s three-year median of 10.98X.

For StoneCo, the Zacks Consensus Estimate for both 2025 and 2026 earnings per share has been revised north over the past 30 days.

STNE currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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