DLocal Limited (NASDAQ: DLO) shares plummeted 13.19% in intraday trading on Wednesday, following a sharp 7.27% decline in after-hours trading the previous day. The significant drop came despite the fintech company reporting third-quarter earnings that beat analyst expectations, as investors appeared concerned about margin pressure and short-term challenges.
For the third quarter, DLocal reported earnings per share of $0.17, surpassing the consensus estimate of $0.16 and marking an 88.89% increase from the same period last year. Revenue also exceeded expectations, coming in at $282.483 million, a 52.06% year-over-year growth and above the anticipated $262.006 million. However, the company's gross margin declined to 37%, raising questions about profitability amid rapid expansion.
Adding to investor concerns, DLocal faced a short-term hit of $13.1 million from Argentina flow restructuring, impacting its quarter-over-quarter net profit. While the company expects to reverse this in coming quarters, it contributed to market unease. The steep sell-off suggests that investors are reassessing DLocal's valuation and expressing caution about its future growth trajectory in the competitive fintech landscape, despite the company's strong top and bottom-line performance.
Comments