DLocal Limited (DLO): A Bull Case Theory

We came across a bullish thesis on DLocal Limited (DLO) on Substack by Steve Wagner. In this article, we will summarize the bulls’ thesis on DLO. DLocal Limited (DLO)'s share was trading at $11.77 as of May 16^th. DLO’s trailing and forward P/E were 24.51 and 20.96 respectively according to Yahoo Finance.

dLocal (DLO) began 2025 with record-breaking results, affirming its position as a vital payments enabler connecting global merchants to consumers across emerging markets. The Uruguay-based fintech processed $8.1 billion in Total Payment Volume (TPV), up 53% year-over-year (72% in constant currency), and generated $216.8 million in revenue, growing 18% YoY despite a slight dip in take rate. The shift toward higher-margin cross-border transactions and tight cost controls drove a 35% increase in gross profit to $84.9 million, with gross margins expanding to 39.2%. Adjusted EBITDA surged 57% to $58 million (27% margin), while net income more than doubled to $46.7 million. Strong cash flows allowed dLocal to declare a special dividend of $0.525 per share, totaling $150 million, and commit to annual dividends going forward—signaling confidence in sustainable growth and shareholder alignment.

Operationally, dLocal deepened partnerships with key global players like Temu, Rappi, and Zepz, demonstrating its unique ability to support both pay-in and pay-out use cases across over 30 countries. Temu now uses dLocal to reach 15+ emerging markets, Rappi expanded its integration including Pix in Brazil, and Zepz is leveraging dLocal to streamline remittances. While profitability in Latin America benefited from inflation-driven volumes and FX spreads, Brazil’s shift to Payment Orchestration pressured take rates temporarily. Competition impacted Mexico results, and FX headwinds weighed on Africa and Asia. Nonetheless, dLocal’s geographic and sector diversification, scale advantages, and margin expansion highlight a durable growth story. With expanding verticals and growing transaction complexity, the company remains well-positioned to unlock further value.

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.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

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