Investors Are Bullish on StoneCo - Here's What You Need to Know.

Despite an impressive 6.85% jump to $10.69, StoneCo may soon be running into resistance as it is now within range of its average analyst target price of $11.18. With an average rating of hold, and analysts assigning target prices from 2.28 to 20.11 dollars per share, investors will be asking themselves if the Software stock can sustain this bullish run.

StoneCo's short interest can give us an idea of what future price movements the market expects from the stock. The short interest is the percentage of shares that are tied up in short positions, which will provide gains to the investor only if the stock price falls. The stock's short interest is 7.4% which seems to indicate a mixed sentiment on STNE

Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.

Another way to gauge the sentiment on StoneCo is to look at the percentage of institutions that are invested in the stock. In this case, 68.2% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.

Institutions have vast resources. If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.

Overall, there is mixed market sentiment on StoneCo because of its an analyst consensus of some upside potential, a hold rating,, an average amount of shares sold short, and an average number of institutional investors. Warren Buffett famously said that in the short term, markets are voting mechanisms, but in the long term, they are weighing mechanisms. This means that long term investors should be aware of a stock's fundamentals before committing.

At a glance, here are some essential statistics you may want to know about STNE:

  • It has a trailing 12 month price to earnings (Eps) of $-1.15 per share

  • StoneCo has a trailing 12 month Price to Earnings (P/E) ratio of -9.3 while the S&P 500 average is 15.97

  • The company has a Price to Book (P/B) ratio of 0.3 in contrast to the S&P 500's average ratio of 2.95

  • StoneCo is a Technology company, and the sector average P/E and P/B ratios are 26.5 and 5.57 respectively

To never miss out on our deep dives into fundamental analysis of market moving stocks, take a moment to subscribe to our free newsletter.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.