10 Worst Artificial Intelligence Stocks to Buy Under $10

5) DLocal Limited (NASDAQ:DLO)

Number of Hedge Fund Holders: 19

Share Price As On September 19: $8.62

DLocal Limited (NASDAQ:DLO) operates a payment processing platform worldwide. Microsoft and DLocal Limited (NASDAQ:DLO) announced a landmark partnership to integrate cutting-edge Artificial Intelligence (Al) solutions in the Fintech sector.

Bears believe that the shares of DLocal Limited (NASDAQ:DLO) are expected to be impacted by the challenges around the potential for merchant renegotiation, required investments, and volatility in specific markets where the company operates, mainly Argentina and Nigeria. In the recent past, the company’s stock price was pressured mainly because of decelerating growth rates and uncertainty about its foreign fintech businesses. DLocal Limited (NASDAQ:DLO) is also challenged by risks stemming from currency devaluation, mainly in markets such as Nigeria and Argentina. DLocal Limited (NASDAQ:DLO)’s exposure to geopolitical risks might weigh over its business performance.

That being said, experts believe that DLocal Limited (NASDAQ:DLO)’s growth prospects stem from strategic initiatives that are aimed at capitalizing on emerging market opportunities. Its revenues are expected to be aided by a well-diversified merchant and geographic base. Some of the primary tailwinds include its focus on key metrics such as gross profit growth, diversified business verticals, and strong relationships with major tech companies. These drivers are further bolstered by the company’s healthy balance sheet position and strong FCF.

As of June 30, 2024, it had US$531.6 million in cash and cash equivalents, which includes US$186.2 million of own funds and US$345.4 million of merchants’ funds.

The long-term outlook for DLocal Limited (NASDAQ:DLO) is supported by its focus on TPV growth and increasing share of wallet. Also, Wall Street is optimistic about its recent partnership with Microsoft. By offering localised and flexible payment solutions, DLocal Limited (NASDAQ:DLO) will make sure that Microsoft’s customers in emerging markets have access to efficient payment methods.

Polen Capital, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:

“DLocal Limited (NASDAQ:DLO), a payments processing company headquartered in Uruguay saw further weakness after reporting disappointing first quarter results. While payment volumes and revenues grew 49% and 34%, respectively, in 1Q 2024, gross profit only grew 2% due to elevated processing costs. The company has also invested more in building out its scale and functionality, which further weighed on profitability. Longer term, as one of the leading emerging markets payments processing companies, we believe dLocal can continue to see attractive growth and improve profitability under a highly-regarded management team.”