Why Did StoneCo Stock Crash Today?

Brazilian e-commerce software company** StoneCo **(STNE 17.79%) stock got crushed like chalk after reporting Q4 earnings last night, despite beating analyst forecasts. StoneCo was expected to earn 2.65 Brazilian reais (R$) per share in Q4, according to Yahoo! Finance, but actually earned R$2.84.

Nevertheless, as of 11:10 a.m. ET Tuesday, StoneCo stock is down 18.7%.

Image source: Getty Images.

StoneCo Q4 earnings

StoneCo’s earnings reports can be tough to track down, but this one is found in a press release on the SEC website. There, we learn that StoneCo grew its sales from continuing operations 13% year over year to R$3.7 billion in Q4, with total earnings of R$706.9 million.

That’s 12.4% year-over-year earnings growth, and a net profit margin of 19%.

For the full year, sales from continuing operations were up 17.5% to R$14.2 billion, with net income of R$2.5 billion, also up 17.5%, and a net profit margin of 17.5%!

These numbers do not count the more than R$3billion StoneCo received from the sale of its Linx software assets last year. StoneCo noted it will use the sale proceeds to reinvest in its core businesses of “payments, banking, and credit, all reinforced by proprietary transaction data, deep distribution, disciplined underwriting, and end-to-end technology.”

For the full year, StoneCo reported adjusted earnings per share of R$9.71 (USD 1.89), up 33.6% from 2024. And this number appears to include proceeds from the Linx sale.

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NASDAQ: STNE

StoneCo

Today’s Change

(-17.79%) $-3.03

Current Price

$14.00

Key Data Points

Market Cap

$4.6B

Day’s Range

$13.48 - $15.25

52wk Range

$8.64 - $19.95

Volume

496K

Avg Vol

5.5M

Gross Margin

12.05%

Is StoneCo stock a sell?

How should investors read all the above? $1.89 per share in profit on a stock costing a bit under $14 per share is a P/E of about 7.3x. Granted, much of the profit came from the Linx sale, but with profits ex-that sale still rising at a 17.5% clip, StoneCo stock looks cheap to me today.