StoneCo Default Surge Sparks Credit Concerns for US Fintech Investors
StoneCo's 90-day non-performing loan ratio jumped to 8.6% in Q2 2026, raising asset quality concerns as the Brazilian fintech aggressively expands its credit book.
US retail investors holding high-growth international technology stocks are facing a reminder of the credit risks inherent in emerging markets. StoneCo Ltd., the prominent Brazilian payment processor backed by major global investment firms, is experiencing a sharp deterioration in its credit quality. The company's latest financial disclosures reveal a steep climb in delinquent loans, signaling that its aggressive push to offer credit to small businesses is coming at a high cost.
According to StoneCo's second-quarter 2026 earnings release, the company's 90-day non-performing loan (NPL) ratio—the percentage of loans where payments are more than three months overdue—surged to 8.6% as of June 30, 2026. This marks a dramatic increase from the 1.4% default rate recorded at the end of 2023 and 4.67% in the second quarter of 2025.
The spike in defaults coincides with a rapid expansion of StoneCo's credit portfolio, which more than doubled year-over-year to reach 3.8 billion reais (approximately $756 million) in the second quarter of 2026. Management has aggressively targeted micro, small, and medium-sized businesses in Brazil, using automated underwriting tools to cross-sell working capital loans and credit cards. However, this rapid credit growth has outpaced the company's risk controls, leaving its balance sheet exposed as older loan vintages mature in a high-interest-rate environment.
This deterioration places StoneCo well behind its direct competitors in the Brazilian fintech landscape. PagSeguro Digital Ltd., a direct Nasdaq-listed rival that targets a similar merchant base, reported a 90-day NPL ratio of just 3.4% for the same period. In its second-quarter 2026 earnings call, PagSeguro executives cited a broader Brazilian market average default rate of 6.2%—meaning StoneCo’s delinquency rate has now climbed significantly above the national benchmark.
While credit card processing remains StoneCo's primary revenue driver, the rising defaults have forced the company to increase its provisions for expected losses to 187.6 million reais in the second quarter of 2026. S&P Global Ratings recently noted that while the overall impact on StoneCo's credit profile is currently limited because the credit business represents less than 10% of consolidated revenues, management has begun adopting a more conservative stance toward credit origination in response to these deteriorating market conditions.
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StoneCo Ltd. is listed in New York on the Nasdaq exchange under the ticker STNE. It is also a component of several emerging market and fintech-focused exchange-traded funds, such as the ARK Fintech Innovation ETF (ARKF).