I last talked about StoneCo Ltd. one month ago and how they were the Paypal/Square of Brazil providing financial technology solutions that empower merchants and integrated partners to conduct electronic commerce across in-store, online, and mobile channels in Brazil.
StoneCo, recently went public last October and so I thought StoneCo was just getting started, suggesting to go long at $31, but the stock price broke the 4 hr demand zone at $31, which prompted me to dug into the matter a bit more.
In this case, the plunge appears to be triggered by a move from a rival company. Itau Unibanco Holding SA (NYSE: ITUB), a large Brazilian bank, said that it will begin to advance credit card payments to small and medium-sized merchants.
Itau’s card-processing unit, Rede, will pay merchants in just two days, much faster than the 30-day industry standard. This could certainly put pressure on other payment processors in the Brazilian market, including StoneCo.
Even so, if StoneCo can figure out a way to compete with Itau’s latest move, today’s decline could be a good buying opportunity. If not, StoneCo’s growth could certainly slow down.
Time will tell if StoneCo can respond accordingly. However, I would look to see if price reverses at the monthly demand at $20.
On the weekly chart, there is a level within the monthly zone, that looks promising.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.