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Technology & Semiconductor Equity Commentary
dLocal is still cheap at a low-teens free-cash-flow multiple while growing 25-35%. It needs so little capital to sustain hypergrowth that it pays out half its free cash flow as dividends, and with almost no stock-based compensation it can keep growing well above 25% for a long time. At 10-12x free cash flow it looks worth multiples of the current price. x.com x.comÂ
dLocal's diversified model makes its sharp selloff look unwarranted. x.comÂ
dLocal could be the Adyen of emerging markets, quietly building payment rails for the next billion consumers. It combines 25-30%+ growth, expanding margins and solid 2026 guidance with a surprisingly low valuation. x.comÂ
dLocal faces stronger competitors and margins that will keep falling. Many of its regions are a constant uphill battle; even if it does well long term, payments stocks are uninvestable. x.comÂ
dLocal is growing nearly as fast as an LLM company yet trades at just 2x, so the dip is worth buying. x.com x.comÂ
dLocal remains one of the highest-conviction long-term holdings, a hated moat whose great results drew only a 5% after-hours gain. Per @mvcinvesting, Q4 revenue was $337.9M versus $296.1M expected, free cash flow doubled to $64.7M and payment volume grew 70%. For 2026 dLocal guides 50-60% volume growth and 27.5-32.5% operating profit growth, and it announced a $300M buyback. x.comÂ
dLocal sits in payment processing, a sector that 30 years of data show to be dead because margins are low. Fintech is just software, without the asset leverage that banks have. dLocal fell about 11% after EPS of $0.14 missed the $0.15 estimate, per TrendSpider. x.com x.com x.comÂ
dLocal's business is materially better than in 2021, yet its valuation is far lower. It now generates nearly as much gross profit in one quarter as it did in all of 2021, while its market cap is $4B against a $20B peak in 2021. x.comÂ
dLocal can conservatively double from here as operating profit keeps compounding after its latest earnings report. Q2 operating profit of $64M annualizes to $256M, so at a $4B market cap the stock trades around 15.6x operating profit. Consensus EBIT of $474M in 2028 and $573M in 2029 implies 36% and 31% CAGRs, a fair base case given current growth. At 15x 2029 operating profit, enterprise value would reach $8.6B versus $3.4B today. x.comÂ
dLocal's take rates face merciless, structural pressure from regional competition and market structure. Management, by contrast, expects only an asymptotic take-rate decline and nothing structural. The stock fell 8% after Q1 earnings. x.com x.com x.com x.comÂ
DLocal is an overlooked opportunity because total payment volume is outgrowing its declining take rate by a wide margin, so the take-rate worry the market fixates on shouldn't be a problem. It also has a rock-solid balance sheet, an outstanding management team and a forward P/E of just 13. x.comÂ
