Short seller Muddy Waters Capital announced it had placed a short bet on Uruguayan payments company dLocal, calling it “likely a fraud”, sending its shares plummeting on Wednesday. .
Texas-based Muddy Waters Capital released a research report on Wednesday during a conference in London. Its chief investment officer, Carson Block, said it cited concerns about disclosure to investors, governance structure and control of client funds.
Report shared in dlocal
DLO,
up nearly 50% in Wednesday afternoon trading but they were up 5% in pre-opening trading on Thursday. Its shares are down 70% this year and have a market capitalization of $6.3 billion.
The report states: “The DLO strikes us as overly complicated, with poor controls, including an over-reliance on manual processes, poor management, and a single business owner. prescribed price difference”.
But in a statement on its website, Dlocal said Muddy Waters’ claims were “baseless” and would clarify the allegations in due course.
“The report contains many inaccurate statements, baseless claims and speculations. Short seller reports are often designed to drive down stock prices to the benefit of the short seller to the detriment of the company’s shareholders.
“We warn shareholders to make investment decisions based on this report. Dlocal will dismiss the allegations in the appropriate form in the near future.”
Dlocal launched its IPO in June 2021 and since its inception, Dlocal has connected merchants with consumers across Latin America, Asia and Africa through its payment processing technology.
The company was backed by private equity firm General Atlantic in 2019. Hedge fund tech giant Tiger Global is an investor, increasing its position by 2.5 million shares to the total. nearly 4.3 million shares worth $88 million at the year-end of September.
