The trading narrative for dLocal (DLO), based on the DCF Valuation - HatedMoats article, is that the stock is significantly undervalued.

Key Trading Narrative Points:

Verdict: Undervalued.
Intrinsic Value (Base Case): $22.49 per share.
Price at Time of Analysis (Nov 2025): $13.38 per share.
Margin of Safety: Approximately 40%.
Market Implication: The current price of $13.38 implies that the market expects dLocal's Free Cash Flow (FCF) to decline perpetually after 10 years, which the author believes is too pessimistic.
Bull Case Target: $29.50 per share.
Bear Case Target: $16.40 per share.
Investment Thesis: dLocal has a capital-light model with high returns on invested capital and a competitive moat from its local expertise in cross-border payments across 40+ emerging markets.
Risks: Take-rate compression, regulatory shocks, merchant concentration, and ROIC erosion.
Upside Catalysts: New merchant wins, improved economics, better disclosures, and operating leverage.

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Disclaimer

The user cracken25 holds no position in NasdaqGS:DLO. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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DLocal

AnalystLowTarget

Community Contributor

Rising Tariffs And Digital Currencies Will Disrupt Global E-Commerce

DLocal helps global brands take payments in hard-to-serve markets, but a shifting world of higher trade barriers, tighter rules, and government-backed digital wallets could squeeze its growth and fees. At the same time, new products and stronger leadership could help it keep winning, making the outlook less clear-cut than it seems.

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US$15.15

5.3% undervalued

24.12%

Revenue growth p.a.

201

DLocal

J_Tyrader

Community Contributor

5/8/26 — DLocal: trading 70% below a 9.8%-discounted fair value, with the cash flow to defend it

DLocal looks priced as if its growth is about to cool sharply, even though it turns a large share of sales into cash and sits on a strong cash cushion. The big question is whether that growth can hold up, because the upside case depends heavily on what happens over the next several years.

View narrative

US$50.96

71.9% undervalued

================================================================================ INTRINSIC VALUE (DCF) CALCULATION BREAKDOWN — NASDAQ:DLO ================================================================================ Target Fair Value: USD 50.96 Current Stock Price: USD 15.24 Market Assessment: 70.1% Undervalued / +234.2% Upside Potential -------------------------------------------------------------------------------- 1. MARKET METRICS RECONCILIATION -------------------------------------------------------------------------------- * Undervaluation Formula: (Fair Value - Current Price) / Fair Value (50.96 - 15.24) / 50.96 = 0.7008 -> 70.1% * Upside Potential Formula: (Fair Value - Current Price) / Current Price (50.96 - 15.24) / 15.24 = 2.3425 -> +234.2% -------------------------------------------------------------------------------- 2. DISCOUNT RATE / COST OF EQUITY (CAPM) -------------------------------------------------------------------------------- * Formula: Risk-Free Rate + (Beta * Equity Risk Premium) * Inputs: Risk-Free Rate = 4.25% Beta = 1.10 ERP = 5.00% * Calculation: 4.25% + (1.10 * 5.00%) = 4.25% + 5.50% = 9.75% (Rounded to 9.8%) -------------------------------------------------------------------------------- 3. 10-YEAR CASH FLOW FORECAST ARCHITECTURE -------------------------------------------------------------------------------- * Base Year Free Cash Flow (FCF0): USD 437.59M (USD 1.4837 per share) * Shares Outstanding: 294.93m (Market Cap 4.50B / Price 15.24) * FCF Margin: 40.0% * Growth Rate Fading Schedule: - Year 1: +25.00% FCF USD 546.99M - Years 2-10: Linear reduction from +25.00% down to +2.50% - Year 10: +2.50% FCF USD 1.56B - Year 11+: +2.50% (Terminal Perpetual Growth Rate) -------------------------------------------------------------------------------- 4. MATHEMATICAL STEPS TO INTRINSIC VALUE -------------------------------------------------------------------------------- * Step A: Present Value of Discrete Cash Flows (Years 1 to 10) PV_Cash_Flows = Sum [ FCF_t / (1 + 0.0975)^t ] for t = 1 to 10 PV_Cash_Flows = USD 6.35B * Step B: Terminal Value (Gordon Growth Model at Year 10) TV_10 = [ FCF_10 * (1 + 0.0250) ] / (0.0975 - 0.0250) TV_10 = [ 1.56B * 1.0250 ] / 0.0725 = USD 21.99B * Step C: Discount the Terminal Value to Present Day PV_TV = 21.99B / (1 + 0.0975)^10 = 21.99B / 2.5354 PV_TV = USD 8.67B * Step D: Equity Value and Fair Value per Share Equity Value = 6.35B + 8.67B = USD 15.03B Fair Value = 15.03B / 294.93m = USD 50.96 -------------------------------------------------------------------------------- 5. FUTURE P/E MULTIPLE BLENDED BENCHMARK -------------------------------------------------------------------------------- * Formula: Sum of (Multiple * Re-normalized Weight) * Inputs: Forward Multiple: 17.1x @ 45% Weight Peer Median (n=31): 20.2x @ 35% Weight Current Multiple: 22.7x @ 20% Weight * Calculation: (17.1 * 0.45) + (20.2 * 0.35) + (22.7 * 0.20) = 7.684 + 7.077 + 4.540 = 19.301x (Rounded to 19.3x) -------------------------------------------------------------------------------- 6. SENSITIVITY OF THE FAIR VALUE -------------------------------------------------------------------------------- * Growth +22.0% -> 45.47 | +25.0% -> 50.96 | +28.0% -> 50.96 * Discount 8.75% -> 60.09 | 9.75% -> 50.96 | 10.75% -> 44.07 ================================================================================