Please ensure Javascript is enabled for purposes of website accessibility

Why StoneCo Stock Was Up on Tuesday

By Jon Quast – Updated Jun 23, 2020 at 4:09PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is it a good thing for Brazil's president to wear a face mask in pubic?

What happened

Shares of Brazilian payments company StoneCo (STNE -5.83%) traded higher on Tuesday, and there wasn't any clear reason why. There weren't any press releases or prominent analyst calls. Nevertheless, the stock was up 4.7% for the day.

If anything, investors should have been more apprehensive than anything with StoneCo stock. That's because Brazil just passed the grim milestone of 50,000 deaths from the COVID-19 pandemic.

A hand plots an arrow on a graph higher.

Image source: Getty Images.

So what

Brazil is the fifth largest country in the world by area, and the sixth largest by population, with over 200 million people. There have been over 1.1 million confirmed coronavirus cases in the country, and now total deaths have surpassed 50,000, second only to the U.S.

The coronavirus makes it hard for StoneCo's primary customers, small and medium-size businesses, to operate. Business was humming pre-coronavirus: StoneCo's total payment volume (TPV) was up 48%, 52%, and 63% year over year in January, February, and the first half of March, respectively. But TPV fell hard once lockdowns began -- down 4% in second half of March, only up 9% in April, and 23% in May.

StoneCo's business will be challenged until normal social and economic activity can return in Brazil. Perhaps investors are hoping the country gets a better grip on the situation, after a judge ordered the country's president, Jair Bolsonaro, to wear a face mask in public or face a fine. Many believe the president hasn't taken the virus seriously. Maybe this is a sign the other branches of government are interested in strengthening their collective response.

Now what

For better or worse, it's not always clear what's driving a stock's movement. In reality, it probably happens more than we're comfortable admitting and it underscores why we aren't too wrapped up in a short move higher or lower. For a stock to be a great buy, StoneCo included, we're looking at trends creating business opportunities, competitive advantages, and management teams capable of turning healthy profits. Those factors play out over years, not days.

Jon Quast has no position in any of the stocks mentioned. The Motley Fool owns shares of Stoneco LTD. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

StoneCo Ltd. Stock Quote
StoneCo Ltd.
STNE
$8.73 (-5.83%) $0.54

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.