Stone is cleaner, but churn matters
- Stone sold Linx for more than BRL 3 billion, removing a software side quest and sharpening focus on merchant finance.
- The platform served more than 4.8 million active payments clients in Brazil at the end of 2025.
- Banking and credit are the bright spots, with BRL 11.1 billion of deposits and a BRL 2.8 billion credit portfolio.
- The worry is the payments base, where Q4 TPV growth slowed to 5.3% and churn rose in newer customer cohorts.
- The stock case depends on fixing churn, keeping credit losses controlled, and proving the upmarket SMB push works.
A sharper Stone, with repairs due
The bull case is that Stone is turning from a card machine company into a financial operating system for Brazilian merchants. It now focuses on payments, banking, and credit after selling Linx to TOTVS for more than BRL 3 billion. That sale matters because software was outside Stone's strongest edge: local sales, merchant service, and financial products.
The evidence is strongest in engagement. Heavy users, meaning clients using 3 or more Stone solutions, reached 41% of the base by the end of 2025. Deposits rose to BRL 11.1 billion, and the credit portfolio reached BRL 2.8 billion. Stone is also moving upmarket inside SMBs with Sales Specialists and a payroll tool, aiming for merchants that need more than basic card acceptance.
The bear case is not vague. Core payments growth has slowed. Q4 TPV growth was 5.3%, and management later pointed to higher churn in clients added during 2025. Some bundles became too complex, and pricing friction hurt retention.
So the page view is balanced. Stone looks cleaner and cheaper than the fear around it may suggest, but it must show that the 2025 cohort problem can be fixed and that credit losses do not rise faster than expected.
Payments start the 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.
Its go-to-market model is 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 may not get strong service from large banks or legacy processors.
Deposits also matter. Stone uses a cash sweep strategy, moving retail deposits into time deposits. At year-end 2025, 86% of BRL 11.1 billion in deposits were time deposits. That can lower funding costs and support lending economics.
The model breaks if the bundle becomes hard to understand or too expensive. Q1 2026 showed that risk. Newer 2025 cohorts churned more, and automated credit models for smaller merchants performed worse in a weaker Brazil macro backdrop.
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 with daily payback from merchant sales, plus a growing credit card product. The portfolio reached BRL 2.8 billion, but losses need close watching.
Payroll
The new payroll tool helps merchants manage and pay salaries and overtime. It supports the move toward larger, more complex SMB 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 merchant 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 after sale agreements in 2025.
What could still break
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%, hurt by macro pressure, softer same-store sales, and execution issues. If TPV does not reaccelerate in H2 2026, banking and credit cross-sell will have less fuel.
New customer churn stays high
High impact · Medium oddsManagement said Q1 2026 churn pressure was concentrated in clients onboarded during 2025. The cause was not broad failure in legacy clients, but complex bundles and pricing friction in newer cohorts. This is fixable, but only if simpler offers improve retention.
Credit losses rise faster than planned
High impact · Medium oddsCredit is a major upside driver, but it can also hurt earnings quickly. NPLs over 90 days reached 5.21% as the book matured, and Q1 2026 brought higher provisioning after automated models for smaller merchants lost efficiency. Stone is tightening risk selection and leaning toward more secured lending.
Brazil macro pressure hits merchants
Medium impact · High oddsStone sells mostly to Brazilian MSMBs, so weak consumer demand, high rates, or tight credit can reduce sales and repayment capacity. Management already cited a tougher macro environment and softer same-store sales. Macro weakness can hurt TPV, deposits, and credit quality at the same time.
Competition compresses take rates
Medium impact · Medium oddsBrazilian payments is crowded, with banks, fintechs, and digital-native competitors fighting for merchants. Stone's service model is a strength, but price still matters. If competitors force lower fees, Stone may have to choose between growth and profit.
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 on merchant financial services.
What is the main risk for STNE stock?
The clearest risk is that payments growth keeps slowing while churn remains high in newer clients. The second big risk is credit quality, because a larger loan book can raise profits or create losses.
What should investors watch next?
Watch whether TPV growth improves in H2 2026, whether churn in 2025 cohorts falls, and whether NPLs over 90 days stay controlled. Those signals will show whether the cleaner strategy is working.