Core Viewpoint - MercadoLibre is identified as a strong candidate for inclusion in Berkshire Hathaway's portfolio due to its significant growth potential and competitive advantages in the e-commerce and financial sectors of Latin America [3][15]. Company Overview - MercadoLibre is valued at approximately $120 billion, making it a suitable investment target for Berkshire Hathaway, which seeks large companies for impactful investments [6][4]. - The company operates as the leading e-commerce and financial platform in Latin America, with a growing user base and extensive logistics capabilities [7][15]. Growth Potential - MercadoLibre's revenue growth rates were 38%, 37%, and 49% for the years 2024, 2023, and 2022 respectively, indicating robust business expansion [11]. - The company is well-positioned to benefit from ongoing economic growth, increased e-commerce adoption, and the expansion of digital financial products, suggesting a favorable outlook for the next decade [11]. Competitive Advantages - MercadoLibre has developed a strong logistics network, allowing over half of its shipments to be delivered within one to two days, which enhances customer satisfaction and retention [13]. - The growing base of over 70 million active buyers supports the company's future growth through increased third-party listings, subscription services, and advertising demand [14].

Core Insights - The market is currently undervaluing certain growth stocks, particularly MercadoLibre, which has shown impressive earnings growth despite limited recognition among investors [1][2][9] Company Overview - MercadoLibre is a leading e-commerce platform in Latin America, primarily operating in Brazil, Mexico, and Argentina, and is often compared to Amazon due to its comprehensive business ecosystem [4][5] - The company reported a revenue of approximately $6.8 billion for the last quarter, reflecting a 34% year-over-year increase, driven by a 21% rise in merchandise sales and a 39% increase in payment transactions [6][11] Financial Performance - Analysts expect MercadoLibre to maintain comparable revenue growth through at least 2027, with earnings projected to rise from $37.69 per share to $95.20 over the next three years [7] - The company's net income for the last quarter was $10.31 per share, falling short of analysts' expectations of $11.93 due to rising costs, particularly from free shipping initiatives [11][20] Market Position and Growth Potential - Latin America is experiencing a digital transformation similar to North America two decades ago, with increasing smartphone penetration and broadband connectivity, which positions MercadoLibre favorably for future growth [14][16] - The e-commerce market in Latin America is projected to grow at a rate of 19% annually through 2027, providing significant opportunities for MercadoLibre to capture market share [18][19] Strategic Decisions - The company's decision to lower the minimum order threshold for free shipping is seen as a long-term investment in customer engagement, despite short-term profit margin pressures [12][21] - The current stock price reflects market skepticism regarding these strategic investments, creating potential opportunities for long-term investors [20][21]

Analyst's Disclosure:I/we have a beneficial long position in the shares of EPD, O, AMZN, NVDA, MELI, ARE, NVO, GPN either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice ...

Core Insights - MercadoLibre (MELI) is facing significant profitability pressures despite a strong market presence in Latin America, necessitating careful investor scrutiny [1] Financial Performance - In Q2 2025, MELI reported net revenues of $6.79 billion, a 34% year-over-year increase, but adjusted EPS of $10.31 missed estimates by 14.15% [2] - Operating margin contracted by 210 basis points year-over-year to 12.2%, primarily due to aggressive investments in free shipping and marketing [2][7] - Operating expenses rose to approximately $2.3 billion, a 38.4% increase year-over-year, now constituting 33.4% of revenues [4] Strategic Decisions - The company's strategy has favored rapid expansion over sustainable earnings, raising concerns about capital allocation efficiency [4] - Significant investments in logistics and promotional campaigns have been made to capture market share, particularly in Brazil [4] Competitive Landscape - MELI faces intensified competition from established players like Nubank in fintech and Amazon in e-commerce, leading to sustained margin compression [5] - Competitors are leveraging advanced technologies and aggressive pricing strategies, forcing MELI to increase marketing expenditures [5] Market Performance - MELI shares have declined by 10% over the past three months, underperforming both the Zacks Retail-Wholesale sector and the Zacks Internet-Commerce industry [6][7] - The company's forward 12-month Price/Earnings ratio is 39.84X, significantly higher than the industry average of 24.67X, indicating a stretched valuation [11] Investor Sentiment - Rising political uncertainty, currency volatility, and macroeconomic instability in key markets have negatively impacted investor sentiment towards MELI [7][16] - The current trajectory of MELI suggests a need for investors to reassess their positions due to ongoing margin compression and competitive pressures [16][17]

Core Insights - MercadoLibre (MELI) operates the largest e-commerce and fintech ecosystem in Latin America, focusing on marketplace services, logistics, digital payments, and credit solutions across key markets like Brazil, Mexico, and Argentina [1] - The company is experiencing sustained margin pressure as it prioritizes market expansion over short-term profitability, with the operating margin contracting 210 basis points year-over-year to 12.2% in Q2 2025 [1][10] - Significant investments in user acquisition and engagement, particularly in fintech, are expected to keep spending elevated, impacting margins until operational efficiencies are realized [2] Financial Performance - The credit operations portfolio has grown 91% year-over-year to $9.3 billion, leading to higher provisioning and funding costs [3] - The Zacks Consensus Estimate for Q3 2025 earnings is $9.88 per share, revised downward by 16.6% over the past 30 days, indicating a year-over-year growth of 26.18% [14] - The consensus for 2025 earnings is $44.63 per share, also revised downward by 6.5%, suggesting an 18.41% year-over-year growth [15] Competitive Landscape - Mercado Pago competes with NU and StoneCo in the rapidly growing digital finance sector in Latin America [6] - Both competitors are expanding their product portfolios and increasing customer engagement, intensifying competition in the fintech space [7] Market Trends - E-commerce penetration in core markets remains low, indicating significant growth potential, but the heavy investments required may restrain short-term profitability [5] - Logistics costs are rising due to Brazil's expanded free shipping threshold, adding further pressure on margins [4][10] Stock Performance and Valuation - MELI shares have increased by 38.3% year-to-date, outperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector [8] - The stock is currently trading at a forward 12-month Price/Sales ratio of 3.68X, compared to the industry's 2.27X, indicating a relatively high valuation [12]

Group 1 - The recommendation is to buy MercadoLibre (MELI) shares following the Q2 results [1] - The initial coverage article was published on April 10, 2024, indicating ongoing analysis and interest in the company [1] - The analyst has over 5 years of experience in equity analysis in Latin America, providing in-depth research and insights for informed investment decisions [1]

Core Insights - The article emphasizes the importance of conducting personal in-depth research and due diligence before making investment decisions, highlighting the inherent risks involved in trading [3]. Company and Industry Summary - The analysis is intended for informational purposes only and should not be considered as professional investment advice [3][4]. - There is a disclosure regarding the analyst's beneficial long position in shares of AMZN and GOOG, indicating a vested interest in these companies [2].

Group 1 - MercadoLibre is recognized as one of the leading global e-commerce and fintech companies, often referred to as the "Amazon of South America" [1] - The company's primary market focus is on Latin America, which has a long-standing economic presence [1]

Group 1 - The company focuses on long-term opportunities rather than short-term gains, aiming to invest in firms with strong qualitative attributes and hold them indefinitely [1] - The investment strategy involves managing a concentrated portfolio to avoid underperforming assets while maximizing exposure to high-potential winners [1] - The company plans to publish articles on selected companies approximately three times a week, including extensive quarterly follow-ups and constant updates [1] Group 2 - The analyst has a beneficial long position in AMZN shares, indicating a positive outlook on the company's stock performance [2] - The article reflects the analyst's personal opinions and is not influenced by any compensation from external sources [2]

MercadoLibre Today MELI MercadoLibre $2,329.51 -78.51 (-3.26%) 52-Week Range $1,646.00 ▼ $2,645.22 P/E Ratio 57.46 Price Target $2,740.83 The analyst forecast for a 50% upside is shy of the triple-digit gains implied by the technical action, but it is a good starting point and likely to be increased over time as quarterly results are issued. Likewise, the institutional group provides support in Q3, owning roughly 90% of the stock and reverting to buying in the first weeks of the quarter. Mercado Libre had a ...