Is DLO a good stock to buy? We came across a bullish thesis on DLocal Limited on MVC Investing’s Substack by M. V. Cunha. In this article, we will summarize the bulls’ thesis on DLO. DLocal Limited’s share was trading at $11.49 as of June 8th. DLO’s trailing and forward P/E were 18.39 and 13.53 respectively according to Yahoo Finance.
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DLocal Limited, together with its subsidiaries, provides payment processing services worldwide. DLO delivered a highly compelling Q4 2025 performance, reinforcing its position as a dominant cross-border payments infrastructure provider across emerging markets. Total Payment Volume reached a record $13.1B, up 70% YoY and 26% QoQ, marking the fifth consecutive quarter of >50% YoY growth and highlighting accelerating scale, with full-year TPV of $40.8B, up 60% YoY and representing an 82% CAGR since 2020.
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Growth was broad-based across pay-ins, payouts, local-to-local, and cross-border flows, with standout strength in on-demand delivery, e-commerce, remittances, and advertising, supported by deep expansion across key geographies such as Brazil, Mexico, South Africa, and Egypt. Revenue reached $337.9M, up 65% YoY, crossing the $1B annual milestone, while gross profit rose to $115.8M, reflecting continued monetization of scale despite a lower net take rate of 0.88%, which management emphasized as an output of strategy rather than a constraint on value creation.
Adjusted EBITDA grew 38% YoY to $78.4M, while net income surged 87% YoY to $55.6M, demonstrating strong operating leverage and improving profitability quality. Free cash flow reached $64.9M, up 100% YoY with 117% conversion, underscoring exceptional cash generation. Return on equity expanded to 35%, while NRR reached a remarkable 162%, driven almost entirely by existing merchants, reinforcing strong embedded growth visibility.
Management guided 2026 TPV growth of 50–60%, gross profit growth of 22.5–27.5%, and operating profit growth of 27.5–32.5%, highlighting durable expansion at scale. Capital returns were strengthened through a $300M buyback program and dividend initiation, implying a combined ~9–10% shareholder yield at current levels.
With long-term upside potential driven by continued emerging market digitization, deep merchant expansion, and potential monetization of new products like BNPL, stablecoins, and AI-driven commerce, DLocal is positioned to compound strongly, with the investment case implying substantial upside as scale, profitability, and cash generation continue to converge.
Previously, we covered a bullish thesis on DLocal Limited (DLO) by Oliver | MMMT Wealth in March 2025, which highlighted its emerging-market payments moat, regulatory complexity advantage, and long-term digitalization-driven growth potential despite near-term volatility. DLO’s stock price has appreciated by approximately 17.96% since our coverage. M. V. Cunha shares a similar view but emphasizes record Q4 2025 execution, 70% YoY TPV growth, 162% NRR, and 2026 guidance of 50–60% TPV growth with capital returns and improving profitability.
DLocal Limited is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held DLO at the end of the first quarter which was 28 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 time frame. If you are looking for an AI stock that is more promising than DLO and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.