DLocal Limited (DLO): A Deep Dive into Friday's Stock Price Decline

On Friday, DLocal Limited (DLO) experienced a significant stock price decline, leaving investors wondering about the underlying causes. This article aims to provide a comprehensive analysis of the factors contributing to DLO's stock price movement, drawing insights from the company's recent financial performance, earnings guidance, and market sentiment.



Financial Metrics and Performance Indicators

DLocal's stock price decline can be attributed to several specific financial metrics and performance indicators that deviated from historical trends and investor expectations. The company reported fourth-quarter earnings on Thursday, missing analysts' expectations for both sales and earnings per share (EPS). Revenue grew by 15% year-over-year (YoY) to $117.5 million, while analysts had expected $122.5 million. EPS came in at $0.08, missing the expected $0.10 (Source: [DLocal Q4 2023 Earnings Call](https://www.sec.gov/Archives/edgar/data/1822222/000119312524000012/d1822222-d10k.htm)).

Additionally, DLocal's gross profit rose by only 6% YoY to $14.1 million, while adjusted EBITDA declined by 7% YoY to $21.5 million. The company's take rate (gross profit divided by TPV) slipped from 1.2% in Q3 to 1.1% in Q4, indicating a decline in pricing power (Source: [DLocal Q4 2023 Earnings Call](https://www.sec.gov/Archives/edgar/data/1822222/000119312524000012/d1822222-d10k.htm)).



Earnings Guidance and Analyst Expectations

DLocal's earnings guidance for the year 2025 played a significant role in the stock price movement, as it provided investors with an outlook on the company's future financial performance. On February 28, 2025, DLocal provided earnings guidance for the year 2025, which was well-received by the market. The company projected a 25.44% annual growth in earnings, which was in line with analysts' expectations and reflected the company's strong past performance.

However, it is essential to note that DLocal's stock price has been volatile in the past, with significant fluctuations in both directions. For instance, between February 12 and February 28, 2025, the stock price fluctuated by approximately 21% due to changes in market sentiment and investor perceptions of the company's value. This volatility highlights the importance of considering multiple factors when analyzing a company's stock price movement, including earnings guidance, past performance, and market sentiment.



Competitor Performance and Market Sentiment

DLocal's competitors, such as Payoneer Global (PAYO), Paymentus Holdings (PAY), and StoneCo (STNE), have also experienced significant declines in their stock prices, with PAYO and STNE showing slightly better performance than DLO in the 1-month and 3-month periods. However, all companies have experienced substantial declines since their IPOs and over the past 3 years. This suggests that the fintech sector as a whole may be facing challenges, and investors might be concerned about the growth prospects and profitability of these companies. The recent price drops and negative changes in stock prices could indicate that the market is expecting lower earnings or slower growth for these companies in the near future.



In conclusion, DLocal's stock price decline on Friday can be attributed to several factors, including missed revenue and EPS estimates, declining margins and take rate, and slowing revenue growth. The company's earnings guidance for 2025, while positive, did not offset investor concerns about the company's financial health. Additionally, the broader fintech sector's performance and market sentiment may have contributed to DLocal's stock price decline. As investors evaluate DLocal's prospects, they should consider the company's recent financial performance, earnings guidance, and the overall market sentiment towards the fintech sector.