StoneCo Cuts 2026 Profit Outlook as Brazil's High Rates Bite

For global investors holding Latin American high-growth assets, the reality of prolonged high borrowing costs is hitting home. Companies that promised rapid expansion by cross-selling credit to small- and medium-sized businesses are finding that when central banks keep interest rates elevated, the customers they lend to struggle to pay them back.

The latest casualty of this macroeconomic squeeze is StoneCo, the prominent Nasdaq-listed Brazilian payments and financial services provider. On November 12, 2026, the company reported third-quarter adjusted gross profit of R$1,475.9 million, representing an 8.0% decline year-over-year. The primary driver behind the profit drop was a massive 128.6% surge in loan-loss provisions, which climbed to R$197.4 million as delinquency rates ticked upward.

Squeezed by Brazil's High Interest Rates

The deterioration in credit quality reflects the broader pressure building within the Brazil economy. Brazil's central bank has kept its benchmark Selic rate highly restrictive at 13.75%, making it incredibly expensive for local merchants to service their debt. For StoneCo, which has aggressively expanded its merchant credit portfolio by 78.0% year-over-year to R$4.1 billion, this high-rate environment has turned a lucrative growth engine into a source of balance sheet stress. The company's non-performing loans (NPL) over 90 days jumped to 9.92% in the third quarter of 2026, up from 5.03% in the same period last year.

Faced with these headwinds, StoneCo management has taken a much more conservative stance. The company cut its fiscal year 2026 adjusted gross profit guidance to a range of R$6.1 billion to R$6.2 billion, down from the previous projection of R$6.6 billion to R$7.0 billion established in late 2025.

Scrapping Multi-Year Targets

More concerning for long-term investors is management's decision to suspend its entire fiscal year 2027 outlook. The company had previously projected an adjusted gross profit of R$7.2 billion to R$8.3 billion for 2027. During the earnings call, Chief Executive Officer Mateus Scherer explained that the decision to withdraw the targets was driven by severe macroeconomic volatility and limited visibility, particularly regarding the future path of Brazilian interest rates.

While StoneCo continues to see solid volume growth in digital payments—boosted by a 45.3% surge in transactions using Brazil’s instant-payment system, Pix—the cost of managing credit risk is currently overshadowing its core transaction processing business.

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StoneCo is listed in New York on the Nasdaq exchange under the ticker STNE. For retail investors who do not own the individual stock but hold broad emerging market or fintech exchange-traded funds, StoneCo is a common constituent in specialized portfolios like the ARK Fintech Innovation ETF or the Global X MSCI Colombia & Peru & ETF, as well as broader Latin American equity funds.