The Federal Reserve increased rates by 25 basis points and the Nasdaq took off almost 2% due to more contractive policies. What will happen to the Uruguayan unicorn in this scenario?
The index nasdaq took off almost 2% and leads the rebound in Wall Street after the rise in interest rates by the United States Federal Reserve (Fed) by 25 basis points but, above all, based on the lower prospects for increases in the short and medium term. In this context, eyes are on the actions of dLocal, the first unicorn of Uruguay, and what can happen with its price in this stock index.
The world was waiting for what the Fed would finally do regarding the reference interest rates, after the break of the Silicon Valley Bank (SVB) and the millionaire fund rescue carried out by the United States government that turned the decision into a dilemma for the entity. But not only central banks were waiting for the news, but also companies listed on the stock Exchange.
In this sense, the best news for the financial markets was not the 25% rise in rates, but the possibility that, from now on, the Fed pause new raises after the turmoil in the banking sector. This stock indices shot up and, above all, the Nasdaq, the index where dLocal’s shares are listed.
What can happen to dLocal titles?
The first Uruguayan unicorn comes from going through difficult times in terms of the value of its shares and the credibility of its operations. But after the lapidary report of Muddy Waters Capital in mid-November of last year, which caused the collapse of the titles by more than 56%; and with a slight relapse due to the collective lawsuit promoted at the beginning of the month by the law firm by the law firm Bragar, Eagel and Squire PC; Payment platform shares were flat and on the mend.
The measures taken by the company’s board of directors —such as, for example, the repurchase of shares to demonstrate the confidence of the authorities in their own operations—, as well as the support from different investors who maintained their shares, contrary to the chain short sales that occurred at the end of 2022, managed to make dLocal recover almost 70% of its value since that Black Wednesday.
Certainly, the titles of the Uruguayan unicorn also fell after the global financial crisis that unleashed the collapse of the SVB and the consequent liquidity problem of Credit Suisse, down 8.18% from the peak they had reached before the bank crash.
But with the Nasdaq rally it is highly possible that dLocal will also experience iincreases in the value of your sharesaccompanying the upward trend that, apparently, technology companies are beginning to experience after a critical moment.
The backing of investors
Likewise, the rating of investors and analysts with the range of “hold” for dLocal shares support the theory that the company’s stock has a brighter future than its recent past.
Even the investment management company Baron Funds, in its analysis of growth expectations for the fourth quarter of 2022, argued with dLocal Limited (DLO) that “the accusations in the report (of Muddy Waters, for fraudulent activities) had no arguments and the conclusions contained factual errors.” Faced with this, the company pointed out that they are convinced of the Uruguayan unicorn’s ability to reach strong earnings growth.
Source: Ambito
