We came across a bullish thesis on DLocal Limited on MVC Investing’s Substack by M. V. Cunha. In this article, we will summarize the bulls’ thesis on DLO. DLocal Limited’s share was trading at $11.97 as of February 16th. DLO’s trailing and forward P/E were 21.38 and 14.24 respectively according to Yahoo Finance.
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DLocal Limited, together with its subsidiaries, operates a payment processing platform worldwide. DLO continues to demonstrate exceptional growth across its global emerging markets payments business, processing a record $10.4B in total payment volume (TPV), up 59% YoY and 13% QoQ, marking the fourth consecutive quarter of >50% YoY growth. Revenue reached $282.5M, beating consensus by $20M, driven by strong performance in commerce and remittances, with Latin America, particularly Brazil and Colombia, showing notable acceleration.
The company’s gross margin of 37% and adjusted EBITDA of $71.7M reflect temporary regional headwinds in Egypt, Argentina, and Mexico, but management emphasizes these are non-structural. TPV retention remains impressive at 157%, and net revenue retention reached 149%, highlighting DLocal’s ability to grow revenue even without new merchants. Free cash flow of $37.6M and a healthy cash balance of $333M, combined with essentially no debt, underscore the company’s financial strength.
DLocal’s long-term strategy focuses on expanding merchant value through innovative products such as BNPL Fuse, supporting 27 alternative payment methods across 16 countries, stablecoin on/off-ramps, and selective POS capabilities, positioning the firm as the single financial infrastructure partner across 40+ emerging markets. Strategic partnerships with Western Union, Bolt, Fireblocks, Grey, Google, and Capitec further reinforce DLocal’s ecosystem and global reach.
While short-term margin fluctuations and declining take rates attract attention, these are offset by scaling TPV, expanding merchant penetration, and secular digitization trends. With a massive and growing total addressable market, strong operating leverage, robust FCF generation, and a diverse product roadmap, DLocal remains exceptionally well-positioned for multi-year value creation, making the current valuation highly compelling for long-term investors.
Previously, we covered a bullish thesis on DLocal Limited (DLO) by Oliver | MMMT Wealth in March 2025, which highlighted the company’s positioning in emerging markets, long-term growth potential, improving TPV, and attractive valuation. DLO’s stock price has appreciated by 22.89% since our coverage. M. V. Cunha shares a similar view but emphasizes DLocal’s record $10.4B TPV, expanding merchant base, innovative product rollout, and robust financial strength, providing a more detailed operational update.
DLocal Limited is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held DLO at the end of the third quarter which was 24 in the previous quarter. While we acknowledge the risk and potential of DLO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DLO and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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