We came across a bullish thesis on DLocal Limited on HatedMoats’s Substack. In this article, we will summarize the bulls’ thesis on DLO. DLocal Limited’s share was trading at $14.52 as of January 12th. DLO’s trailing and forward P/E were 25.93 and 17.27 respectively according to Yahoo Finance.
DLocal Limited (DLO) operates as a mission-critical payments infrastructure platform enabling global merchants to transact seamlessly with consumers across emerging markets. Its “One dLocal” model—a single API, contract, and platform spanning over 40 countries—simplifies fragmented payment systems and regulatory complexities, forming a durable competitive moat rooted in local expertise rather than just technology.
Despite concerns around macro volatility and competitive fee pressure, the business remains capital-light and highly profitable, generating a 21.4% LTM EBIT margin on $863.5 million in revenue and strong returns on invested capital. Concentration among top clients is monitored but evolving, with merchant composition shifting as new enterprise clients join.
A 10-year, three-stage DCF analysis yields an intrinsic value of $22.49 per share versus a current price of $13.38, implying a 40.5% margin of safety. The model projects a 21% revenue CAGR over the next decade, with growth moderating from 37% in FY2025 to 6.5% by Year 10 and EBIT margins stabilizing near 19–21%.
Conservative assumptions include a 20% normalized tax rate, 1.5% capex-to-revenue ratio, and WACC of 9.73% incorporating emerging-market risk. The resulting enterprise value of ~$6.1 billion and equity value of ~$6.6 billion translate to a robust valuation base not dependent on aggressive growth or multiple expansion.
Even in a bear scenario ($16.4/share), downside appears limited, while the bull case ($29.5/share) offers material upside. The market’s current pricing implies perpetual FCF decline, an implausible assumption for a high-return platform operating in structurally expanding digital economies. With a scalable, cash-generative model and defensible moat, dLocal is materially undervalued.
Previously we covered a bullish thesis on DLocal Limited (DLO) by Oliver | MMMT Wealth in March 2025, which highlighted its strong positioning in emerging-market payments and regulatory expertise. The stock has appreciated about 49.07% since then as fundamentals improved. The thesis still stands. HatedMoats shares a similar view but emphasizes a detailed DCF-based valuation approach and margin of safety.
