LatAm’s dLocal Shares Drop 50% After Muddy Waters Questions Disclosures

Muddy Waters Capital has unveiled a short of Uruguay-based, U.S.-listed payments company dLocal Ltd. (DLO) in a report that drew a swift response from the firm.

In the report released Wednesday (Nov. 16), Muddy Waters Capital said dLocal has reported a rate of growth and profitability that makes it an “outlier.”

“While we have found no pictures of its CEO wearing black turtlenecks, our research leads us to believe that DLO is likely a fraud,” Muddy Waters Capital said in the report. “We also have concerns over its disclosures about, and controls of, client funds.”

dLocal Ltd. commented on the short seller report published by Muddy Waters Capital in a press release posted Wednesday on the payments company’s website.

“The report contains numerous inaccurate statements, groundless claims and speculation,” dLocal said in the release. “Short seller reports are often designed to drive the stock price downwards to serve the short seller’s interests to the detriment of the company’s shareholders. We caution shareholders from making investment decisions based on this report. dlocal will rebut the allegations in the appropriate forum in due course.”

dLocal powers local payments in emerging markets. With one direct application programming interface, one platform and one contract, it enables global companies to accept payments, send payouts and settle funds globally, the firm said in the press release.

Muddy Waters is one of the best-known short sellers in the world, while dLocal is backed by investors General Atlantic and Tiger Global and has partnered with Amazon, Spotify and Microsoft, The Financial Times reported Wednesday.

On Monday (Nov. 14), dLocal reported a 51% rise in total payments volume in the last quarter compared to the same quarter the previous year as well as a 63% rise in revenues, according to the report.

At the close of trading Wednesday, dLocal’s share price was down about 51%.