Is DLO a good stock to buy? We came across a bullish thesis on DLocal Limited on The Cash Flow Compounder’s Substack. In this article, we will summarize the bulls’ thesis on DLO. DLocal Limited’s share was trading at $13.53 as of April 20th. DLO’s trailing and forward P/E were 20.82 and 13.53 respectively according to Yahoo Finance.
Copyright: daviles / 123RF Stock Photo
dLocal (DLO) is a leading cross-border payments platform connecting global enterprise merchants with consumers in over 40 emerging markets (EMs), where international credit cards are often unavailable. The company simplifies complex local payment ecosystems—including card processing, bank transfers, compliance, tax, and currency regulations—through a single API and a physical presence with regulatory licenses in each market, supporting over 900 local and alternative payment methods.
Read More: 15 AI Stocks That Are Quietly Making Investors Rich
Read More: Undervalued AI Stock Poised For Massive Gains: 10000% Upside Potential
Its transaction-based fee model provides high operating leverage, enabling strong profitability and predictable revenue, although recent focus on large enterprise clients and competitive markets has caused margins to contract from 32% in 2021 to 16% in 2024. Management is highly aligned with shareholders, as co-founders hold over 47% of the company and receive compensation solely via dividends.
dLocal benefits from powerful secular trends, including digitalization, e-commerce adoption, and rising consumer spending in EMs, with the total addressable market expected to reach $3.7 trillion in digital payments by 2028. Its asset-light business model, high recurring revenue, and 149% net revenue retention highlight its resilient core, while its economic moat is supported by high switching costs, deep regulatory expertise, and integration into global merchants’ payment infrastructure, making it essential and difficult to replace.
The company has maintained consistent profitability since inception, achieving an average ROCE of 39% over the past five years and generating predictable free cash flow, despite sensitivity to currency fluctuations and customer concentration risks.
Growth levers include geographic expansion, vertical diversification, and new payment solutions such as BNPL and stablecoin corridors. While regulatory and geopolitical risks exist, dLocal’s leadership position, recurring revenue model, and long-term growth potential make it a high-conviction business with a projected 30% revenue CAGR through 2028, offering a compelling risk/reward profile for investors.
Previously, we covered a bullish thesis on DLocal Limited (DLO) by Oliver | MMMT Wealth in March 2025, which highlighted the company’s focus on emerging markets, revenue growth, and expanding digital payments. DLO’s stock price has appreciated by approximately 38.91% since our coverage. The Cash Flow Compounder shares a similar view but emphasizes its high recurring revenue, strong economic moat, and growth opportunities through geographic and product expansion.
DLocal Limited is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held DLO at the end of the fourth quarter which was 26 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.
Disclosure: None.
