Stone is cleaner, but large loans test the model
- Stone sold Linx for more than BRL 3 billion, removing a software distraction and sharpening its focus on merchant finance.
- The platform served more than 4.8 million active payments clients in Brazil at the end of 2025.
- The credit portfolio doubled to BRL 3.8 billion in Q2 2026, though rising defaults forced a shift toward government-backed loans.
- Large corporate bankruptcies in Brazil led to severe defaults, proving the upmarket push carries real concentration risk.
- The stock case depends on capping large loan losses, fixing new customer churn, and proving the broader financial bundle works.
A sharper Stone, with fresh credit cracks
The bull case is that Stone is turning from a card machine company into a comprehensive financial operating system for Brazilian merchants. The company sold Linx to TOTVS for more than BRL 3 billion and fully integrated Pagar.me into the core Stone brand, creating a unified digital and physical offering. Heavy users, meaning clients using three or more solutions, reached 41% of the base by the end of 2025. The credit portfolio has doubled to BRL 3.8 billion, supported by a smart pivot into government-backed loans that defend yields while capping downside.
The bear case is that moving upmarket carries painful, lumpy risks. High interest rates are cracking the Brazilian corporate sector. In Q2 2026, the dedicated credit desk suffered from sudden defaults, including a BRL 11 million loss from a single large retailer bankruptcy. On top of that, Stone had to take a BRL 200 million provision linked to a liquidated credit card issuer because card networks had not settled the funds.
So the page view is balanced. Stone looks cleaner and cheaper than the fear around it might suggest. However, it must show that capping maximum ticket sizes on the dedicated desk successfully stems large blowups, and it needs a favorable resolution on the BRL 200 million network settlement.
Payments start the merchant flywheel
Stone makes money by helping merchants accept payments, move money, hold cash, and borrow. Payments are the entry point. Once a merchant runs sales through Stone, the company can offer a bank account, Pix transfers, cards, payroll, and working capital loans. By integrating Pagar.me, Stone now gives merchants a single account for both physical and online sales.
Its go-to-market model is highly local. Stone Hubs bring sales and service close to merchants, while Green Angels provide hands-on support. This is meant to win trust with small businesses that might not get strong service from large banks. Stone has recently pushed upmarket by deploying dedicated Sales Specialists for larger merchants.
Deposits also matter. Stone uses a cash sweep strategy, moving retail deposits into time deposits. At year-end 2025, 86% of its BRL 11.1 billion in deposits were time deposits. That lowers funding costs and supports lending economics.
The model breaks if the bundle becomes hard to understand or if credit selection fails. Newer 2025 cohorts churned more due to complex offers, and lending to larger merchants brought severe defaults in 2026.
The merchant money stack
Payment acquiring
Stone processes card and digital payments for merchants. This is the core product and the main doorway into the rest of the platform.
Ton
Ton targets micro-merchants with simpler payment tools. It expands reach, but smaller clients can be more sensitive to price and service issues.
Digital banking
Stone offers accounts, Pix, transfers, and cards. Deposits reached BRL 11.1 billion at the end of 2025, making banking a key part of the thesis.
Credit
Stone offers working capital loans and credit cards. The portfolio doubled to BRL 3.8 billion, but large defaults forced a shift toward government-backed lending.
Payroll
The payroll tool helps merchants manage and pay salaries and overtime. It supports the move toward larger, more complex business customers.
TapStone and Payment Links
These tools let merchants accept payments in more ways, including fast settlement options. They help Stone stay useful in everyday workflows.
One reported business now
For 2025 annual reporting, Stone revised its structure and reports continuing operations as a single operating segment. Software businesses, including Linx, were classified as discontinued operations.
What could still break
Large loans bring heavy defaults
High impact · Medium oddsStone pushed upmarket and built a dedicated credit desk for larger merchants. In Q2 2026, record judicial recuperations in Brazil led to massive, lumpy defaults on multi-million Real tickets. If capping ticket sizes does not work, these concentrated blowups will continue to hurt earnings.
Systemic counterparty failure
Medium impact · Medium oddsStone acts as an acquirer and relies on card networks to settle funds. When a sizable credit card issuer was liquidated in 2026, Stone had to provision BRL 200 million because the networks delayed settlement. Stone carries this friction on its balance sheet.
Payments growth stalls
High impact · Medium oddsStone still needs payment volume to feed the rest of the model. Q4 TPV growth slowed to 5.3 percent, hurt by macro pressure and softer same-store sales. If TPV does not reaccelerate, banking and credit cross-sell will have less fuel.
New customer churn stays high
Medium impact · Medium oddsManagement said Q1 2026 churn pressure was concentrated in clients onboarded during 2025. The cause was complex bundles and pricing friction in newer cohorts. This is fixable, but only if simpler offers actually improve retention.
Brazil macro pressure hits merchants
Medium impact · High oddsStone sells mostly to Brazilian businesses, so high interest rates or tight credit can reduce sales and repayment capacity. Macro weakness can hurt TPV, deposits, and credit quality all at the same time.
In one breath
What does StoneCo actually do?
StoneCo provides payments, banking, and credit tools for merchants in Brazil. A shop can use Stone to accept payments, hold money, send Pix transfers, use cards, manage payroll, and borrow working capital.
Why did Stone sell Linx?
Management said Linx was not a bad business, but it sat outside Stone's main advantages. Selling it for more than BRL 3 billion let Stone focus purely on merchant financial services.
What is the main risk for STNE stock?
The clearest risk is credit quality. The portfolio doubled to BRL 3.8 billion, but a recent spike in large corporate bankruptcies caused sudden defaults on multi-million Real loans.
What should investors watch next?
Watch whether the move toward government-backed loans stabilizes credit losses. Also track whether TPV growth improves following the Pagar.me integration into the core Stone brand.
Sources and research notes
This page combines Finn's company research with public filings and other cited materials. The thesis is reviewed when material company information changes; Finn Scores use the latest available scoring data.
- Thesis reviewed
- August 16, 2026
- Score data
- September 27, 2026
- Reviewed by
- Shivam Bharuka
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