Why DLocal Stock Got Thrashed on Thursday

Key Points

• A selling investor is unloading 15 million shares of stock.

• This is being offered at a discount to Wednesday's closing price.

• 10 stocks we like better than DLocal ›

Fintech stock DLocal (NASDAQ: DLO) wasn't a good place to park anyone's money on Thursday. On news of a large chunk of shares being sold by an institutional investor, the company's stock dived by nearly 8%. The benchmark S&P 500 index fared much better, closing the day almost 1% higher.

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.

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Image source: Getty Images.

The company added that the issue's underwriting syndicate, led by JPMorgan Chase unit J.P. Morgan, Goldman Sachs, and Morgan Stanley, 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.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group and JPMorgan Chase. The Motley Fool recommends DLocal and recommends the following options: long January 2027 $7 calls on DLocal and short January 2027 $10 calls on DLocal. The Motley Fool has a disclosure policy.