DLocal Ltd (NASDAQ: DLO), a payments company that helps global merchants collect and pay out money in emerging markets, was indicated about 7% lower before the open on October 26, 2026, after Luiz Inacio Lula da Silva won Brazil's presidential runoff. It had closed at $15.06 on October 23. A long/short fund manager bought shares the same day, arguing the selloff ignored how spread out dLocal's business is, so we checked how much of the company actually depends on Brazil.
This is journalism and commentary, not investment advice. We hold no position unless stated.
Key facts
- The trigger: Lula beat Flavio Bolsonaro about 51.8% to 48.2% on October 25, and Brazilian stocks, the real and rate futures sold off hard on October 26.
- Brazil exposure: Brazil produced $90.2 million of dLocal's $399.7 million Q2 2026 revenue, about 23%, and roughly a record $40 million of gross profit, near 31% of the total, per FXC Intelligence.
- Growth: Q2 total payment volume rose 92% to $17.7 billion and revenue rose 56%, per the company's results.
- The catch: gross profit grew only 29%, and gross profit as a share of volume fell to 0.72% from 1.07%.
- Cash and buybacks: $794.9 million of cash at June 30, of which $369.1 million was corporate cash, and about 6.9 million shares repurchased for $86.1 million in the quarter.
- Guidance: 2026 gross profit growth raised to 25-30%.
- Next report: Q3 results on November 12, 2026, after the close.
Is DLO a good bet right now?
The election hit is real but partial. Brazil is about a quarter of revenue and closer to a third of gross profit, so a weaker real does matter. But most of dLocal's money is made elsewhere, including Argentina, which produced $68.9 million of Q2 revenue.
The bigger long-term question is not the election. It is whether dLocal can keep growing volume this fast while earning less on each dollar it processes.
Why are investors bullish on dLocal?
- Diversification. Latin America is about 82% of revenue, but it is spread across many countries, not one.
- Volume momentum. Local-to-local volume grew 141% in Q2 to $10.8 billion.
- Cash generation. Adjusted free cash flow rose 41% to $68.5 million in Q2.
- Buybacks. The company is working through a $300 million repurchase program authorized in March 2026.
Who's making this call and why?
Deep Sail Capital, a long/short fund run by Sean Westropp, posted on October 26 that "$DLO was also hit hard (which shouldn't really have been because of the diversified model) and I started a position today." It came minutes after he called the MercadoLibre drop "a gift to long term investors."
Track record. In our tracking, Deep Sail Capital is 13-12 (a .520 win rate) on 25 calls scored at 180 days against the S&P 500, with an average edge of +8.94 points. Its last 10 scored calls went 2-8, and its longs are 4-8. Its best was an AXTI long, up 116.7 points versus the index. See the scoreboard.
Other supporters: WK Thesis, a small account that once owned the stock and holds no position now, did the math. It wrote that a real staying about 10% weaker costs roughly 3% of group gross profit, adding: "For dLocal, this is continuity, not a regime change." Dearg Doom, a private investor, posted that he "treated myself to another slice of Dlocal $DLO."
Who disagrees?
We found no credible X account making a detailed bear case today. The skeptical case comes from the filings and the tape.
- Shrinking take rate. Gross profit per dollar of volume fell by about a third in a year, so faster volume is not turning into equally fast profit.
- Concentration. FXC Intelligence notes one large ride-hailing merchant drove much of the recent growth.
- Rates and the real. If the selloff in Brazilian rate futures sticks, borrowing stays expensive for longer, which could slow the consumer spending that drives local payment volume.
- Policy risk. WK Thesis itself flags new taxes on cross-border payments as the thing that would make this a long-term problem.
What are the key facts to verify?
- The Q2 2026 results release for volume, margins, cash and buybacks.
- FXC Intelligence's Q2 breakdown for Brazil and Argentina revenue and gross profit.
- The company's Q3 report date notice.
What would prove it right or wrong?
Right: the November 12 report shows Brazil gross profit holding up in dollars, the 25-30% gross profit growth guide is kept, and buybacks continue at lower prices.
Wrong: Brazil volumes slow, a new tax lands on cross-border payments, or the take rate keeps falling faster than volume grows.
This is journalism and commentary, not investment advice. We hold no position unless stated.
