DLocal: Early Innings — Buy the Pullback Into Q2 Results

Hook & thesis

dLocal is a payments infrastructure specialist for emerging markets. After a period of blistering top-line expansion the market is treating the stock like a mature payments name — compressing multiples and creating a buying window. I think the company is still in the "early innings" of growth: TPV acceleration and record gross profit combined with index inclusion should attract incremental institutional flows and re-rate the stock if gross margins stabilize.

This is a tactical, mid-term trade. I want to own DLO through the company's Q2 results (announced 08/13/2026) and the subsequent re-evaluation of net take rates. Entry at $14.41 gives a defined risk-reward profile: upside to $18.00 if the company delivers continued TPV momentum and margin stability, stop at $12.50 to cap losses if growth or take rates disappoint.

What dLocal does and why it matters

dLocal provides cross-border payment rails and localized payment processing for merchants operating in emerging markets, with a heavy focus on Latin America. The core value proposition is simple: allow global merchants to accept payments and move money in currencies, rails, and channels that local consumers actually use. For merchants that want scale across many fragmented emerging markets, that infrastructure — and the local relationships behind it — are a high barrier to replicate.

Why the market should care: penetration of digital payments in Latin America and similar markets remains low versus developed markets, and cross-border e-commerce continues to grow. That establishes a multi-year runway. In Q1 2026 dLocal reported TPV surpassing $14 billion for the first time, a 73% year-over-year increase, and record gross profit of $119 million (40% YoY). Those are the kinds of operational headlines growth investors chase.

Key numbers that matter

• Market cap: approximately $4,248,498,226.
• Current price: $14.41 (previous close $14.77; intraday range $14.225 - $14.91).
• Trailing PE: 22.94; PB: 7.93.
• Q1 2026 headlines: TPV > $14B (73% YoY); gross profit $119M (40% YoY); note the company had six consecutive quarters of 50%+ YoY growth before recent deceleration in gross profit growth.
• Dividend and yield: quarterly distribution of $0.196666 and a dividend yield of about 1.28% — an unusual but tangible return of capital for a growth company.
• Share structure and liquidity: shares outstanding ~294.93 million, float ~70.29 million. 52-week range: $10.38 - $16.78.

Valuation framing

At a market cap north of $4.2 billion and a trailing PE of ~22.9, dLocal sits between pure high-growth SaaS multiples and more mature payments processors. That multiple looks reasonable if the business can sustain 40%+ gross profit growth and high double-digit TPV growth. The company’s historic run of 50%+ YoY quarters sets a high bar; recent gross profit growth of 40% signals deceleration but not collapse.

Two ways to think about the multiple: one, if TPV and merchant adoption keep compounding, investors are likely to pay for scale and sticky revenue streams; two, if net take rates continue to compress, those high growth expectations get trimmed quickly and multiples re-rate lower. Without a direct peer table in this note, view valuation qualitatively — you are paying a premium for emerging-market exposure, an entrenched merchant network, and localized rails that are hard to replicate.

Catalysts to watch

• 08/13/2026 Q2 results and management commentary: the most immediate catalyst. Investors will zero in on TPV growth, gross profit, and any guidance on take rate trends.
• Index inclusion benefit: dLocal was added to the Russell 2000 and Russell 3000 effective 06/29/2026. That tends to broaden the shareholder base and improve liquidity; follow flows into the ticker in the weeks after rebalancing.
• Operational scale evidence: continued TPV acceleration and re-acceleration of gross profit growth would validate the "early innings" thesis.
• Macro tailwinds: higher cross-border e-commerce activity in LatAm and more merchant onboarding will help the top line even if take rates normalize.

Technicals and market tone

Price is trading around the 20-day and 50-day EMAs ($14.64 and $14.01 respectively), with a neutral RSI (~48.7). Short interest has been elevated but falling recently — latest settlement shows ~15.7 million shares short (days-to-cover ~4.65), and short-volume metrics show active shorting on several recent sessions. Momentum indicators show mixed signals: MACD is slightly negative. For this trade I favor buying the pullback into a clearly defined stop rather than chasing a breakout.

Trade plan (actionable)

I recommend a mid-term swing trade sized to risk tolerance with the following parameters. The time horizon is mid term (45 trading days) — long enough to see the market digest Q2 results and any initial re-rating, but not so long that macro noise dominates.

Why these levels? Entry at $14.41 picks up the stock within a range of short-term support (near the 50-day EMA at $14.01). The $18.00 target reflects a re-rating that is not aggressive relative to prior multiples when growth was stronger. The $12.50 stop limits downside if take-rate commentary or TPV growth disappoints materially on 08/13/2026.

Risks and counterarguments

• Declining net take rates. Management and several analysts have flagged falling take rates as the biggest margin risk. If take rates keep compressing, gross profit growth will slow further and multiples could contract.
• Macroeconomic and political risk in core markets. Latin America has elevated FX volatility, political risk, and episodic capital controls. These factors can hurt merchant activity and the company’s ability to repatriate or move funds efficiently.
• Competition and pricing pressure. Global processors and local incumbents (or new entrants) could drive down pricing or win large merchants, pressuring growth and margins.
• Execution risk on scale. Rapid growth across many markets requires executional excellence — settlement, fraud management, compliance — any operational slip could dent growth or increase costs.
• Insider activity and sentiment. A director sold 25,700 Class A shares on 07/07/2026 under a 10b5-1 plan. While the director retains Class B shares, continuing insider selling could spook sentiment if repeated without clear rationale.

Counterargument: Critics will say dLocal is priced for growth it may not sustain. If TPV growth slows below high-double-digits or take rates compress further, the stock could re-rate to a materially lower multiple — especially given its high PB and modest float.

That is a valid point. It’s the very reason this trade requires a hard stop and a mid-term horizon: the Q2 print on 08/13/2026 is likely to be the inflection event for investors trying to discern whether take rates stabilize or continue to erode.

What would change my mind?

I would warm to a larger position if the company reports Q2 results that show TPV growth accelerating again and gross profit margin stabilizing or improving. Conversely, I would downgrade quickly if the company: (a) guides to materially lower take rates, (b) shows meaningful deceleration in TPV growth, or (c) reports an operational mishap that increases costs or interrupts settlement flows.

Conclusion

dLocal is a high-quality payments infrastructure asset in a large, underpenetrated market. The business still looks like it’s in the early innings despite recent margin chatter. The Russell inclusion and Q2 results are clear, near-term catalysts that justify a tactical, mid-term long position with a tight stop. Enter at $14.41, target $18.00, stop $12.50, and plan to hold through 45 trading days to give the market time to digest results and re-assess margins.

Key dates: Russell inclusion effective 06/29/2026; Q2 results scheduled for 08/13/2026; director sale executed on 07/07/2026 (reported).