Why DLocal Stock Got Absolutely Hammered This Thursday
DLocal's stock just got slaughtered—here's why traders are hitting the panic button.
Market Bloodbath
Shares got crushed after disappointing earnings dropped like a bomb. Revenue missed targets, growth projections got slashed, and institutional investors bolted for the exits.
Emerging Markets Exposed
The payments processor got hammered by currency volatility across Latin America and Africa. High inflation and regulatory shifts in key markets torpedoed transaction volumes.
Short Sellers Move In
Hedge funds piled into short positions the second weak guidance hit the wires. Volume spiked 300% as algos kicked in and momentum traders got obliterated.
Wall Street’s ‘Strong Buy’ Turns to ‘Whoops’
Analysts scrambled to downgrade price targets after talking up the stock all quarter—classic sell-side optimism meeting buy-side reality. Another reminder that traditional equity analysts track fundamentals about as well as astrologers track comets.
Fifteen million is a large number
Before market open, DLocal announced that one of its major shareholders is launching a secondary offering of its Class A common stock. An unnamed entity associated with a business called General Atlantic will offer 15 million such shares at a price of $12.75 apiece. That level is well below DLocal's Wednesday closing price, hence the subsequent investor sell-off.
Image source: Getty Images.
The company added that the issue's underwriting syndicate, led byunit J.P. Morgan,, and, have been granted a 30-day option to collectively purchase up to an additional 2.25 million shares.
DLocal stressed that since it is not the entity selling the shares, it will receive no proceeds from the sale. The offering is expected to close on Friday, Sept. 5.
Not necessarily a fire sale
Whenever a major shareholder unloads a holding at what amounts to a discount, it's cause for concern.
We should bear in mind, however, that this doesn't necessarily indicate a loss of confidence in the investment -- stockholders, institutional and individual alike, have many reasons for such moves. More than a few of these have less to do with the investment than the state of the investor.
