DLocal Limited (DLO): A Bull Case Theory

We came across a bullish thesis on DLocal Limited (DLO) on Substack by Ray Myers. In this article, we will summarize the bulls’ thesis on DLO. DLocal Limited (DLO)’s share was trading at $11.46 as of 21^st May. DLO’s trailing and forward P/E were 23.88 and 20.41 respectively according to Yahoo Finance.

DLocal is a Uruguayan fintech company that simplifies cross-border payments for global businesses in over 40 emerging markets. These regions, while complex and underbanked, are home to most of the world’s population and drive a significant share of global GDP growth. DLocal offers a single API that enables global merchants like Amazon, Uber, and Netflix to accept local payments and make payouts in regions where infrastructure is fragmented and heavily regulated.

DLocal’s Q1 2024 earnings call revealed strong financial performance and consistent growth across its core markets. The company reported a 34% year-over-year increase in net revenue, reaching $184 million, while total payment volume (TPV) surged 49% to $5.5 billion. Profitability also remained solid, with adjusted EBITDA growing 30% to $60 million and maintaining a healthy 33% margin. Net income came in at $44.1 million, reflecting a 36% increase from the previous year.

These results were driven by robust performance in key geographies, particularly Brazil and Mexico, which continued to act as strong revenue anchors. Additionally, markets in Africa and Asia demonstrated impressive momentum, with revenue growth of 60% year-over-year, underscoring DLocal’s ability to scale in underpenetrated emerging regions. The company also continued to expand its client base, with enterprise clients rising to 660, and maintained a stable take rate of 3.3%, indicating consistent monetization. Looking ahead, management expressed confidence in further expanding its footprint and sustaining growth by focusing on operational excellence and leveraging its platform in emerging markets. These results reinforce DLocal’s valuation appeal, supported by strong fundamentals, geographic diversification, and a clear growth trajectory.

DLocal Limited (DLO) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held DLO at the end of the fourth quarter which was 21 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 timeframe. If you are looking for an AI stock that is more promising than DLO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.