What happened
Brazilian payment company StoneCo (STNE -0.51%) is soaring on Wednesday, with shares up by more than 11% at 3 p.m. EDT. The fintech has been an especially strong performer in the recent market rebound, rising 43% in the past month alone, mostly fueled by a stellar earnings report.
So what
There doesn't seem to be any company-specific news behind today's move. Rather, the gradual reopening of Brazil's economy is starting far sooner than many had expected.
Image source: Getty Images.
Despite a continuing rise in COVID-19 cases, Brazil is allowing non-essential businesses to open this week in Rio de Janeiro. This is the first of six reopening phases, but given the recent coronavirus trends, could still be a positive surprise to many investors. What's more, Rio de Janeiro mayor Marcelo Crivella said he expects the city to return to normal life by early August.
Now what
Prior to the COVID-19 pandemic (specifically, through March 15), StoneCo's total payment volume was up 52% year over year, which was actually an acceleration over 2019's growth rate for the same period. The fintech's growth rate has slowed considerably since then -- payment volume was up by 23% in May.
To be sure, 23% year-over-year growth in the middle of a global pandemic is still impressive. But the sooner Brazil's economy gets back to normal, the sooner StoneCo could (hopefully) get back to the 50%+ growth rate we saw earlier in 2020, and that's what seems to be driving the stock higher.
