dLocal: Lower Take Rates Are Headwind, Not Fatal Flaw - A Mid-Term Buy Setup

Hook & thesis

dLocal is trading well below its prior highs despite continuing to grow its core volume and gross profit. The market's fixation on falling take rates has pushed the stock into a valuation that, in my view, overstates the permanence of that pressure. Take rates have to be watched - they compress margins - but they don't erase a high-growth payments flywheel: rapid total payment volume (TPV) expansion, strong retention, and a scalable, asset-light model.

My trade idea: buy dLocal near current levels with a mid-term outlook. Entry at $14.28, stop at $11.75 and target $18.00 over roughly 45 trading days. This is a tactical long that trusts continued TPV momentum and margin stabilization more than an immediate re-rating; the upside is driven by both earnings growth and a potential re-appraisal of sustainable take rates.

What dLocal does and why markets should care

dLocal is a cross-border payments processor that specializes in emerging markets. The company simplifies payment acceptance and payouts for global merchants operating in Latin America, Asia and Africa. Its value proposition is to remove friction and local complexity - local rails, currency conversion, tax and regulatory compliance - while letting merchants access under-penetrated consumer markets.

That matters because scale in payments begets advantage. Higher TPV improves negotiating leverage with local partners and spreads fixed costs across more transactions. The market pays for two things in a payments company: volume growth and sustainable economics (take rates and margins). dLocal still checks the growth box.

Where the numbers stand

Pick the headline metrics and they’re supportive. dLocal reported TPV surpassing $14 billion for the first time, a 73% year-over-year increase in the quarter. Gross profit hit a record of $119 million, growing ~40% year-over-year and marking a streak of consecutive quarters with 50%+ YoY growth in segments of the business.

Customer metrics also look strong: the firm reported a net revenue retention of around 153%, suggesting existing merchants are driving material revenue expansion over time. That stickiness is what underwrites long-term unit economics even if per-transaction pricing is under pressure.

At the same time, the market is rightly skeptical about take rates. Since 2021 reported take-rate pressure has contributed to margin compression; one analyst note cites a drop from roughly 53% to 37% in relevant margin metrics since 2021. The firm's P/E sits around 20-21x and market capitalization is roughly $4.03 billion, with shares outstanding of ~282 million and a float in the low 80 million range.

Valuation context

dLocal trades near $14.28 with a 52-week range of $10.64 to $16.78. A P/E in the low 20s implies the market is pricing some durability of growth but also applying a haircut for margin uncertainty and client concentration risk. Put differently: the numerator (expected earnings) still supports today’s price if TPV growth and retention translate into sustained gross profit expansion; the denominator (the multiple) can expand if take rates stabilize or enterprise contracts lock in higher pricing.

I view current pricing as a balanced risk-reward. The stock is not a deep value bargain, but it’s also not priced for perfection. There is a credible path to $18.00 in the mid term if management can show sequential stabilization in take rates or deliver another quarter of TPV-driven gross profit beats that push consensus EPS higher and compress perceived execution risk.

Technical and market structure notes

On the tape, the chart is mixed: short-term momentum indicators are muted (RSI ~43, MACD showing bearish momentum) and recent trading has included significant short activity (short interest rounds to the high single-digit millions with days-to-cover in the ~6 range on the latest read). Volume can spike around news and index events - dLocal was added to the Russell 2000/3000 effective 06/29/2026 which should help baseline liquidity.

Trade plan (actionable)

• Primary trade: Enter long at $14.28.
• Stop loss: $11.75 (capital protection; about 17.8% downside from entry). If price breaches this level on sustained volume, the market is pricing materially worse economics and I would exit.
• Target: $18.00 within a mid-term horizon: 45 trading days. That target assumes a combination of continued TPV-led gross profit growth and either stabilization of take rates or a re-rating to a higher multiple on lower perceived execution risk.
• Horizon rationale: mid term (45 trading days) is the right window to let one to two earnings or company data points (or meaningful merchant contract disclosures) influence sentiment. If the company prints another quarter of strong TPV and gross profit, the path to $18 tightens. If you prefer a longer runway, consider holding with tightened stops toward $16 and re-evaluating after sequential results over 180 trading days.

Catalysts that could push the trade higher

• Quarterly reports showing continued TPV growth above 70% YoY and sequential gross profit expansion (the company reported $119M gross profit and continued high single- or double-digit gross profit growth recently).
• Management commentary or contract disclosures that stabilize take-rate expectations for enterprise clients.
• Increased institutional flows from Russell 2000/3000 inclusion leading to higher multiple and liquidity.
• Any meaningful de-risking of merchant concentration (top-10 merchant concentration has been a concern; evidence of broader client diversification would help multiples).

Risks and counterarguments

• Persistent take-rate pressure - If take rates continue to decline materially, margin compression could outpace TPV growth and EPS would suffer. This is the market’s main concern and the primary downside driver.
• Merchant concentration - The company has historically shown meaningful revenue concentration among its top customers. A loss, renegotiation, or pricing pressure from one of those merchants could have outsized P&L impact.
• Macro and geopolitical exposure - dLocal operates in multiple emerging markets where currency volatility, localized regulatory changes, or political instability can reduce transaction volumes and increase operational costs.
• Competition and pricing - Large global processors or local incumbents could compete on price or product, forcing further take-rate erosion or higher client acquisition costs.
• Short-term technical risk - The near-term technical setup is not uniformly bullish (RSI ~43; MACD negative), and short interest is elevated. Volatility can create short squeezes or downside pressure unrelated to fundamentals.

Counterargument to my thesis: The market could be right that lower take rates are structural - driven by clients pushing for lower per-transaction fees, or by commoditization of certain cross-border rails. If take rates fall several hundred basis points persistently, volume growth won’t be enough to offset margin loss, and earnings could undershoot. That would justify a lower valuation multiple and materially lower stock prices.

What would change my mind

I would be wrong on this trade if follow-up quarters show TPV growth slowing below the current run-rate, net revenue retention meaningfully declines from ~153%, or take-rate erosion accelerates without offsetting cost efficiencies or higher volume. Conversely, clear evidence of take-rate stabilization, lower merchant concentration, and continued gross profit acceleration would increase conviction and prompt a larger position.

Conclusion - stance and sizing guide

My stance: constructive mid-term long. The setup gives asymmetric upside against a defined stop. The market's short-term anxiety about take rates is real, but current fundamentals - strong TPV growth, high revenue retention, record gross profit - create a path for the stock to move higher if the company demonstrates stabilization or improvement in pricing power. Position size accordingly: consider a smaller initial allocation given the execution risk (merchant concentration and take-rate uncertainty) and scale in on evidence of margin stabilization.

Quick reference trade summary

Key monitoring points while you hold: sequential TPV/gross profit prints, take-rate commentary on conference calls, any major merchant contract notices, and changes in short interest or institutional ownership trends.