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1 Spectacular Tech Stock Down 81% to Buy Hand Over Fist in February
DLODLocal (DLO) The Motley Fool·2025-02-21 13:00

Core Viewpoint - dLocal is positioned as a vital player for global merchants aiming to penetrate emerging markets, connecting them to over 2 billion users through a diverse range of local payment methods [1][2] Group 1: Business Growth and Performance - dLocal's shares are currently 81% below their all-time highs, yet the company has experienced a 600% increase in sales since its IPO in 2021, indicating a stronger business foundation [2][3] - The company has expanded its service from 8 countries with 80 payment methods in 2016 to 40 countries with over 900 payment options today, although this rapid growth has impacted its margins [5] - dLocal's free cash flow (FCF) margin stands at 21%, demonstrating financial stability despite the challenges of growth [6] Group 2: Market Potential - dLocal targets countries in Latin America, Africa, and the Asia-Pacific region, which are projected to grow their urban GDP 3.5 times faster than developed markets through 2040 [7] - By 2028, these emerging markets are expected to generate over 3.7trillionindigitalpaymentsannually,presentingalong−termgrowthopportunityfordLocal[8]Group3:LeadershipandStrategicMoves−TheappointmentofCEOPedroArnt,whopreviouslyservedasCFOatMercadoLibre,isseenasapositivedevelopment,suggestingconfidenceindLocal′spotential[10][12]−Arnt′sexperienceintransformingMercadoLibreintoaleadinge−commerceplatformpositionshimwelltoguidedLocalthroughitsgrowthphase[12]Group4:FinancialStrategies−Despiteitsgrowth−focusedstrategy,dLocalhasinitiatedsharebuybacks,utilizinga3.7 trillion in digital payments annually, presenting a long-term growth opportunity for dLocal [8] Group 3: Leadership and Strategic Moves - The appointment of CEO Pedro Arnt, who previously served as CFO at MercadoLibre, is seen as a positive development, suggesting confidence in dLocal's potential [10][12] - Arnt's experience in transforming MercadoLibre into a leading e-commerce platform positions him well to guide dLocal through its growth phase [12] Group 4: Financial Strategies - Despite its growth-focused strategy, dLocal has initiated share buybacks, utilizing a 100 million plan in 2022 and half of a $200 million plan in the following year, reducing its share count by 2% annually [14] - The company's net take rate has remained stable over the last three quarters, indicating a potential stabilization of margins, with the stock trading at 27 times FCF, slightly below the S&P 500 average [15]