If you've invested in any South American e-commerce stocks, regional leader MercadoLibre is likely in your portfolio. But what about Brazil's digital payments leader, StoneCo (STNE -0.52%)? If you've been delaying a purchase of this smaller upstart, it just provided you with 69,700 reasons to reconsider.

Merchants flocking to StoneCo's services

E-commerce and digital payments became increasingly important in Brazil during the pandemic -- just as they did here in the U.S. Though actual economic activity has slowed down (as of this writing, Brazil is still reporting record numbers of new daily COVID-19 cases and will soon pass 1 million overall), StoneCo has been adding merchants to its platform at a rapid pace.  

Specifically, it added 69,700 net new customers in the fourth quarter alone, the most it has ever recorded in a single quarter. It ended 2020 with 652,600 merchants (excluding micro-merchants that are clients of its TON subsidiary), a 36% increase from 2019. While the percentage increase is lower than the company achieved prior to the pandemic, it should dispel investors' concerns about the impacts that business closures in Brazil might have on StoneCo. As for TON, it added another 114,000 active micro-merchants, a 75% increase from the last quarter alone.

A view of Rio de Janeiro, Brazil, from above.

Image source: Getty Images.

While Brazil has been deeply impacted by the health crisis, a host of businesses are turning to StoneCo for help as they adopt new digital capabilities. Plus, though these are big customer counts, remember that Brazil has a population of more than 211 million.  

In addition to adding new customers, StoneCo is deepening relationships with existing ones. COO Lia Matos pointed out on the Q4 earnings call that the share of StoneCo's small-business customers using more than one of its products increased from 10% in 2019 to 34% last year. And the percentage using payments, banking, and credit products ("heavy users") went from essentially zero in 2019 to over 5% in 2020. Matos said this increases StoneCo's efficiency, as heavy users spend about 2.5 times more than those only using its digital payments network.

In total, 2020 was a pretty good year for StoneCo even though consumer spending fell in Brazil, and the company itself gave discounts to customers to help them stay afloat. 





Total payment volume

$39.9 billion

$24.5 billion



$631 million

$489 million


Adjusted net income

$182 million

$163 million


Data source: StoneCo. Based on Brazilian reais to U.S. dollar exchange rates on Dec. 31, 2020.

A long road ahead for Brazil's digital makeover

At the end of 2020, StoneCo had $2.56 billion in net cash and equivalents, an enviable war chest as it tries to accelerate its new customer acquisition efforts. E-commerce and digital payments remain a single-digit percentage of commerce in Brazil, but the pandemic has accelerated the country's migration toward a more modern payments and retail infrastructure. Though it wasn't a perfect year for StoneCo, its payments platform -- complete with software for business management, digital banking, and credit -- is winning over lots of new fans in South America's largest economy.  

Of course, StoneCo's fortunes in the next year will rely on Brazil's ability to beat back COVID-19. The vaccine rollout there is in its early stages, and there's a long way to go before the crisis is under control. Nevertheless, StoneCo will have a lot to gain as the effects of the pandemic start to ease. The tens of thousands of new customers it has been onboarding bode well for the company in the years ahead. If you haven't pulled the trigger yet on this digital payments and fintech leader, it might be time to reconsider.