A speculative play on earnings
Stoneco Ltd (STNE) a Brazilian fintech company in the payment solutions space will announce 2019 Q1 earnings on Monday the 12th of May after the close. A recent IPO (Oct2018) now at 27.91 (Friday ‘s 5/10 close) with a market cap of 7.6 billion USD is a leader in this hot, but extremely competitive space of payments and an acquisition target in the next couple of years. It’s still expensive , albeit a recent drop from low 40s , but an overall good mood for risk & Brazil market liberalization may put it on the spotlight. Warren Buffet has also invested in this and currently (Feb2018) is the second largest shareholder.
Our quantamental model has identified a probability of more than 76% for STNE to make a move up or down of more than 3 USD , with a probability of 65% for this move to be up. A speculative play to take advantage of a possible spike after earnings would be preferable to longer term positioning. For some protection to limit our downside in case of a very negative surprise, we could buy the June put with 25 strike price, which cost 1.25 USD.