Shares of DLocal (DLO, Financial) tumbled on the stock market today, experiencing a substantial drop of 31.24%. The sharp decline follows the release of the company's fourth-quarter 2024 financial results, which revealed a notable decrease in their take rates, triggering investor concern.
Despite an impressive 45% increase in total payment volume for 2024 and a strong 51% year-over-year growth in Q4, DLocal's revenue in the last quarter only inched up by 9% to $205 million. Net income also saw a minimal rise of 4%, reaching approximately $30 million. The reduction in the take rate from 1.2% to 1.1% in Q4 raised alarms among investors, especially considering DLocal's role in facilitating international payments in local currencies.
In terms of stock valuation, DLocal's current stock price stands at $9.46, and it has a Price-to-Earnings (P/E) ratio of 23.64. The Price-to-Book (P/B) ratio is 5.91, which indicates that the stock is trading significantly above its book value. Furthermore, DLocal is seen as "Significantly Undervalued" according to the GF Value metric, with a target estimation of $28.47. For more on GF Value, see the GF Value page.
DLocal projects a robust payment volume growth between 35% to 45% for 2025, though it forecasts a revenue increase of only 25% to 35%. This outlook suggests a continual pressure on the take rate, which could hinder profitability unless offset by increased efficiency or market expansion.
From a financial health perspective, DLocal boasts of a strong Altman Z-score of 4.23, indicating a low risk of bankruptcy. Its Beneish M-Score of -2.63 reinforces the notion that DLocal is unlikely to be involved in financial manipulation.
Investors should closely monitor DLocal's strategic adjustments in response to competitive pressures in the fintech industry. The company's ability to stabilize or enhance its take rates will be crucial for restoring market confidence and supporting long-term value growth.
