Core Insights - MercadoLibre is increasingly recognized as a complex entity rather than just the "Amazon" of Latin America, with strong growth but rising risks [1][2][16] Growth Performance - In Q2 2025, MercadoLibre's net revenue increased by 34% year-over-year to $6.8 billion, driven by nearly 37% growth in gross merchandise value (GMV) on a forex-neutral basis [3] - The company has over 71 million unique buyers, marking a 25% increase from the previous year [3] - The fintech segment, Mercado Pago, saw its credit portfolio grow by 91% year-over-year to $9.3 billion, with monthly active users reaching 68 million [4] Investment Strategy - MercadoLibre plans to invest approximately $13 billion in 2025, focusing on logistics, technology upgrades, and payment infrastructure in key markets like Brazil, Mexico, and Argentina [6] - These investments are crucial for long-term competitiveness but will increase short-term costs and exposure to macroeconomic volatility [7] Profitability Challenges - Profitability faced challenges in Q2 2025, with net income at $523 million and operating margin declining to 12.2% from 14.3% a year earlier [8] - Increased shipping costs and a reduction in the free-shipping threshold from 79 reais to 19 reais contributed to margin pressure [9][10] Competitive Landscape - MercadoLibre faces intensified competition, particularly from Shopee and Temu, which have adopted aggressive pricing strategies [13] - Nubank is also expanding in digital finance, posing a challenge to Mercado Pago's market position [13] Market Environment - Latin America presents additional complexities, including inflation, currency fluctuations, and political instability, particularly affecting the Argentine peso [12] - Despite these challenges, the vast market offers opportunities for multiple players to thrive [14] Investment Outlook - MercadoLibre remains a solid growth stock, but execution risk has become more pronounced, necessitating close monitoring of performance [15][16] - The potential for growth in e-commerce and digital payments in Latin America remains significant, supported by the company's strong competitive advantages [17]

Core Insights - MercadoLibre (MELI) shares have declined 13% over the past three months, underperforming the Zacks Retail-Wholesale sector and the Zacks Internet-Commerce industry's growth of 3.4% and 5.7% respectively [1][9] Financial Performance - MELI's fintech arm, Mercado Pago, saw revenues jump 40% year over year in Q2 2025 to $2.95 billion, while commerce revenue grew 22% [5] - Total payment volume increased 39% to $64.6 billion, and the credit portfolio surged 91% year over year to $9.3 billion, raising concerns about asset quality [5][6] - Non-performing loans over 90 days remained high at 18.5%, and net interest margin after losses fell to 23% from 31.1% year over year [6] Competitive Landscape - Rising competition from Amazon, Sea Limited, and eBay is testing MELI's leadership in Latin America [10][12] - Amazon is expanding its logistics and delivery network, while Sea Limited's Shopee platform is gaining traction through discounts and gamified engagement [10][11] - eBay's expansion of its cross-border marketplace is drawing merchants away from MELI, intensifying competition [12] Geographic Concentration - MELI earns over 90% of its revenues from Brazil, Argentina, and Mexico, making it vulnerable to regional volatility and currency shocks [9][13] - In Brazil, FX-neutral gross merchandise volume grew 29% year over year in Q2 2025, while revenues for Q3 2025 are estimated at $3.62 billion, up 17.4% year over year [14] - Argentina's economic struggles led to a $117 million foreign-exchange loss in Q2 2025, impacting profitability [15] Valuation and Outlook - MELI's forward P/E stands at 36.63X, significantly above the industry average of 24.74X and the broader Retail-Wholesale sector's 24.9X, indicating a premium valuation [9][16] - The Zacks Consensus Estimate for Q3 2025 earnings is pegged at $9.88 per share, reflecting a year-over-year growth of 26.18% [19] - Despite top-line growth, profitability pressures and an overstretched valuation make the stock unattractive at current levels, justifying a Zacks Rank 4 (Sell) [21]

Core Viewpoint - US stocks have experienced significant growth, leading to a strong third quarter, prompting investors to explore opportunities in international and emerging markets, which have shown a rebound, particularly in technology sectors [1][2]. Emerging Markets Overview - Emerging markets, particularly in technology, are gaining investor interest after a long period of underperformance compared to the US market [4][19]. - The EMQQ ETF, which tracks emerging market technology companies, has risen approximately 34% this year, indicating a shift in investor focus [1][19]. Latin America Insights - Latin America is highlighted as a key area of growth, with companies like Marcato Libre and New Bank leading the charge [5][8]. - Marcato Libre is recognized as the largest and best-performing company in Latin America, likened to Amazon for its extensive e-commerce and financial services [8][9]. Consumer Growth in Emerging Markets - The rise of 6.5 billion new consumers in emerging markets, particularly through the adoption of affordable smartphones and internet access, is seen as a major growth driver [6][7]. - Latin America's population of 650 million is noted for its relatively higher GDP compared to other emerging regions, positioning it as a more developed market [7]. Political and Governance Considerations - Despite political instability in regions like Argentina and Brazil, the rapid adoption of technology and online services is expected to mitigate some risks associated with governance issues [10][11]. - Emerging market internet companies are viewed as having higher corporate governance standards, which may provide a safer investment avenue compared to traditional emerging market indexes [12][13]. India as a Growth Opportunity - India is identified as a significant opportunity within emerging markets, boasting the largest population and favorable demographics that drive consumption [14][16]. - The digitization of India's financial system and the availability of low-cost smartphones are seen as catalysts for growth in internet companies [15][16]. Future Outlook - There is a strong belief in continued growth in the emerging markets internet sector over the next 3 to 5 years, with increasing investor interest noted [18][19]. - Despite a historical underperformance, the momentum for emerging markets is expected to persist, with a notable increase in ETF flows this year [20][21]. Chinese Market Dynamics - Chinese internet companies have experienced volatility but are recognized for their profitability and advancements in AI, suggesting potential for future growth despite past challenges [24][25].

Core Viewpoint - The price per share of MercadoLibre does not accurately reflect its value, and it is considered a bargain for long-term investors despite its high trading price [1][2]. Company Overview - MercadoLibre has experienced significant growth, with its stock price increasing over 7,000% since its IPO nearly 20 years ago [3]. - The company is currently led by CEO and co-founder Marcos Galperin, who will step down in 2025, raising concerns about leadership transition [3][4]. Financial Performance - MercadoLibre's net profit margin decreased from 10.5% in Q2 2024 to 7.7% in Q2 2025, resulting in an estimated loss of $200 million in that quarter [5]. - The decline in profit margins is attributed to changes in exchange rates and adjustments in the cost structure of its e-commerce marketplace [7][8]. Management Stability - The new CEO, Ariel Szarfsztejn, has a history with MercadoLibre, which may provide stability during the transition [6]. - Concerns regarding the leadership change are deemed premature, as the company has a solid foundation [6]. Growth Potential - MercadoLibre is focused on increasing product and service adoption through investments in logistics, financial services, and credit offerings [9]. - The company has approximately 71 million active buyers, with a significant portion of commerce revenue coming from Brazil, indicating room for growth [10]. Advertising Revenue - The emerging advertising business could offset losses from profit margin contractions, suggesting a strategic move that may benefit the company in the long run [11]. Valuation - MercadoLibre's stock is currently trading at less than 5 times its sales, which is considered an attractive valuation for potential investors [11]. - Despite the recent contraction in profit margins, the company remains profitable and is expected to continue growing [13].

Core Insights - Mercadolibre (MELI) has become a focal point amid recent market volatility, with its stock price dropping by 3.29% on October 3 [1] - The decline in Mercadolibre's stock price is influenced by eBay's announcement to sell 5.5 million shares, expected to raise over $1 billion, which increases market supply pressure [1] - Despite recent fluctuations, Mercadolibre's stock has risen by 39.96% since the beginning of the year, prompting investors to reassess the stock's value [1] Market Dynamics - eBay's share sale eliminates any potential acquisition premium, contributing significantly to the stock price decline [1] - The strong upward trend in Mercadolibre's stock typically leads to natural price corrections as investors reevaluate the company's value [1] - Broader economic data, industry trends, and global events continue to impact stock price volatility [1] Investor Considerations - Investors are advised to remain calm in the face of short-term market instability caused by the recent share sale [1] - The stock price correction may not indicate a deterioration in the company's fundamentals but rather a reassessment of its intrinsic value [1] - Monitoring the company's financial reports and industry dynamics is essential for identifying potential positive factors [1]

Core Insights - MercadoLibre is experiencing a 10% decline in stock value due to increased competition from Amazon in Brazil, its largest market [1][2] - Amazon's aggressive strategy includes waiving logistics fees and take rates for new Brazilian merchants during the holiday season [2] - Despite the competition, MercadoLibre's strong logistical network and diverse fintech solutions position it well in the market [4][5] Competitive Landscape - Amazon is expanding aggressively in Brazil, but it is still considered an underdog compared to its dominance in the U.S. [3] - MercadoLibre has a robust ecosystem that includes e-commerce and fintech, making it difficult for competitors to disrupt its business [4][5] - Other competitors like Walmart, Costco, Sea Limited's Shopee, and Chinese companies such as Shein and PDD Holding's Temu are also entering the Latin American market [6][7] Market Potential - Latin America is viewed as a promising growth area for e-commerce, indicating that competition will continue to intensify [5] - MercadoLibre has shown significant growth over the past decade, being described as a "24-bagger," highlighting its potential for future growth [5]

Core Points - Mercadolibre's stock price increased by 3.20% on October 2, despite hitting a new low since April 2025 earlier in the day [1] - eBay announced the sale of a significant portion of its Mercadolibre shares, totaling 5.5 million shares, which is expected to raise over $1 billion, adding supply pressure to the market and contributing to the stock's decline [1] - Despite recent volatility, Mercadolibre's stock has risen by 39.96% since the beginning of the year, prompting investors to reassess the stock's value [1] Company Performance - The recent stock fluctuations are influenced by economic data, industry trends, and global events, which continue to play a role in stock price volatility [1] - The large-scale share sale by eBay has introduced short-term instability but may create new opportunities for investors in the long run [2] - The stock price correction does not necessarily indicate a deterioration in the company's fundamentals but may reflect a market reassessment of its intrinsic value [2] Investment Strategy - Investors are advised to monitor the company's financial reports and industry dynamics to capture potential positive factors [2] - Risk management remains crucial in the face of ongoing economic data changes and global events, as uncertainty in stock price fluctuations persists [2] - Maintaining sensitivity to market information and adjusting investment portfolios flexibly may be effective strategies for navigating the complex market environment [2]

I recently joined The REIT Forum , and if you are looking for more investment ideas like this one, get them exclusively at The REIT Forum with access to our subscriber-only portfolios.I first wrote about MercadoLibre (NASDAQ: MELI ) in early June. At that time, I rated the stock a “hold,” as I believed that its price-to-earnings multiple of 50 was unjustified, especially as beating its earningsAmrita runs a boutique family office fund in beautiful Vancouver, where she leads the investment strategy for the f ...

Group 1 - The article discusses the investment strategy of a family office fund led by Amrita, focusing on sustainable, growth-driven companies that aim to maximize shareholder equity [1] - Amrita has a background in high-growth supply-chain start-ups and has experience working with venture capital firms, which has contributed to her investment acumen [1] - The newsletter "The Pragmatic Optimist," co-founded by Amrita, emphasizes democratizing financial literacy and simplifying complex macroeconomic concepts for better understanding [1] Group 2 - The article mentions that MercadoLibre (NASDAQ: MELI) was previously rated a "hold" due to an unjustified price-to-earnings multiple of 50 [1]

Core Insights - MercadoLibre is a promising investment due to its growth optionality, allowing it to expand into new markets despite its current size of $120 billion and a 30% increase in 2025 [1][2] Market Expansion - The company has 71 million monthly active buyers who spent over $15 billion in the last quarter, with Brazil, Argentina, and Mexico making up 96% of total sales, indicating significant growth potential in other Latin American countries [3] - Latin America has 50% more people than the United States, yet its e-commerce penetration is only half that of the U.S., highlighting a vast opportunity for growth [4] Advertising Growth - MercadoLibre increased its share of the Latin American digital ads market from 1.5% in 2019 to 6.7% in 2024, making it the third-largest advertiser in the region, with a 38% sales growth in the second quarter [5] - The Latin American retail media market is expected to triple in size between 2024 and 2028, suggesting continued growth for MercadoLibre in this segment [5] Business-to-Business (B2B) Initiatives - The company launched its B2B offering, enabling 4 million users to make wholesale purchases, with management estimating this market to be four times the size of its existing consumer marketplace [6] Fintech and Credit Services - With 68 million monthly active fintech users, MercadoLibre is positioned to disrupt the underbanked and cash-heavy payment landscape in Latin America [7] - The company has 35 million users in its credit portfolio, with 60% previously having no credit offers, and continues to grow sales by over 30% quarter after quarter [7]