Brazilian card processor StoneCo lays off 20% of workforce, 1,300 employees

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The move, which sent shares down nearly 12% on the Nasdaq, comes as the coronavirus pandemic has badly hurt the retail credit and debit card sales processed by the company and its competitors, such as Cielo SA (SA:CIEL3) and PagSeguro Digital Ltd (N:PAGS).

“This year will be very different from what we were anticipating in late 2019,” Piau told employees in a letter. “As a nation, we will face difficult times that will affect every Brazilian and business of all sizes.”

Still, he said card transaction volume has recovered a bit in April and early May.

Piau said the company will keep its belt tightened on expenses. “We have been very diligent in managing costs and expenses, as well as capital expenditures in order to support our profitability,” he added.

The company said nearly 90% of its workforce is working from home, including most salespeople.

Goldman Sachs (NYSE:GS) & Co’s analysts said in a note to clients that the layoffs may be important to the company’s future. “We think Stone’s highly intensive customer service model leads to much higher personnel expenses than its peers,” they wrote. StoneCo’s workforce grew by 66% last year and personnel accounts for 40% of its total expenses.

The crisis caused by the coronavirus comes amid fierce competition among Brazilian card processors, which led to a price war.

StoneCo made its debut on the Nasdaq in a highly sought-after initial public offering in October 2018, with shares priced at $24, around the same level where they closed on Tuesday.