Core Viewpoint - MercadoLibre Inc (MELI) is expected to report strong third-quarter results for 2024, driven by significant growth in gross merchandise value (GMV) and total payment volume (TPV) [1][2] Group 1: Financial Performance Expectations - Analysts estimate adjusted EPS of $10.55 and revenues of $5.25 billion for the third quarter of 2024 [1] - Goldman Sachs anticipates local currency GMV growth exceeding 30% year-over-year in Brazil and Mexico, with notable acceleration in Argentina [1] - The analyst projects EBIT of $749 million, slightly above the consensus of $740 million, despite expected lower margins of 13.9% compared to the consensus of 14.4% [2] Group 2: Loan Portfolio and Credit Operations - MercadoLibre's total gross loan portfolio is projected to reach $7.6 billion by year-end 2025 and $9.4 billion by year-end 2026, up from $4.9 billion as of Q2 2024 [2] - Credit cards are expected to constitute 46% and 51% of the average annual loan book in 2025 and 2026, respectively [2] - The company has been issuing approximately 1.6 million new credit cards per quarter in Brazil, adding around $325 million to its consolidated credit card book [2][3] Group 3: Management and Market Position - Management is comfortable with the current pace of credit origination, emphasizing a balanced approach to profitability and risk management [3] - The stock price of MELI is currently down 0.51% at $2,037.47 [3]

Core Insights - MercadoLibre is emerging as the dominant e-commerce platform in Latin America, particularly in Argentina, amidst a backdrop of changing consumer trends and economic conditions [1][2]. Group 1: Company Performance - MercadoLibre reported revenues of $5.1 billion, reflecting a significant 42% increase year-over-year [6]. - The gross merchandise volume (GMV) rose by 20%, reaching $12.6 billion, with Argentina showing exceptional growth of 252% in GMV [6][7]. - Monthly active users increased to 52 million, up from 38 million in the same quarter last year, indicating strong user engagement [6]. Group 2: Market Sentiment and Analyst Ratings - The stock is currently trading at 96% of its 52-week high, suggesting bullish momentum among investors [3]. - Analysts have set a consensus price target of $2,246, indicating a potential upside of nearly 10% from the current price [3][4]. - Cantor Fitzgerald has a more optimistic view, projecting a price target of $2,530, which represents a potential upside of 23.6% [4]. Group 3: Institutional Investment - Legal & General and the Canada Pension Plan Investment Board have increased their holdings in MercadoLibre by 3.6% and 12.1%, respectively, reflecting growing institutional confidence [5]. - The total investments from these institutions amount to $531.8 million and $424.75 million [5]. Group 4: Consumer Trends - There is a notable shift in consumer preferences from staples to discretionary products, which could lead to double-digit upside for MercadoLibre's stock [2]. - The record sales of consumer electronics, such as laptops and cell phones, indicate a significant change in market dynamics, moving away from essential goods like food [7].

Core Insights - Mercado Libre is experiencing a consumption recovery in Argentina, highlighted by a record sale of 20 million products in August [1] - The company reported significant growth in nonessential product categories starting from May, with technology products like notebooks, tablets, and televisions showing increases of 173%, 91%, and 59% respectively [1] - Mercado Libre is expanding its lending services, with a 69% year-over-year increase in lending to consumers, merchants, and SMEs reported in September [1] Group 1 - The adoption of credits for merchandise purchases and investments is rising, with a 62% year-on-year increase in credits granted to SMEs and retail businesses, reaching over 125,000 SME users [2] - Interest-free installment financing and promotions positively impacted physical stores, leading to a 68% increase in QR code transactions year over year in September [2] - Latin America is becoming a crucial target for FinTechs, with Mercado Pago applying for a banking license in Mexico to enhance its services [2] Group 2 - The company aims to become the largest digital bank in Mexico upon receiving the banking license, having seen its user base quintuple during its two years as an Electronic Payment Funds Institution [3] - Brazil also represents a significant market for FinTechs, with two-thirds of the population owning smartphones and 63% engaging in digital banking [3]

Core Viewpoint - The recommendation is to buy MercadoLibre (NASDAQ: MELI) shares following the 2Q24 results, continuing the previous recommendation made on April 10th [1] Group 1: Company Performance - The report indicates a positive outlook for MercadoLibre based on its recent financial results, suggesting strong performance in the Latin American equity market [1] Group 2: Analyst Background - The analyst has over 5 years of experience in equity analysis specifically in Latin America, providing in-depth research and insights for informed investment decisions [1]

Group 1 - The continent lacks a leading position in population size, land area, GDP, and demographics compared to other continents [1] - PropNotes focuses on identifying high-yield investment opportunities for individual investors, simplifying complex concepts and providing actionable advice [1] - The content produced by PropNotes aims to assist investors in making informed market decisions, supported by expert research [1] Group 2 - The article expresses the author's personal opinions and discloses a beneficial long position in MELI shares [2] - Seeking Alpha clarifies that past performance does not guarantee future results and does not provide specific investment recommendations [2] - The analysts contributing to Seeking Alpha may not be licensed or certified by any regulatory body [2]

Group 1 - The results reflect a sensitive balance between margin, growth, customer satisfaction, and shareholder expectations, indicating challenges faced by the company [1] - The company aims to invest in firms with strong qualitative attributes, purchasing them at attractive prices based on fundamentals, and holding them long-term [1] - The management strategy focuses on maintaining a concentrated portfolio to avoid underperformers while maximizing exposure to high-potential winners [1] Group 2 - The analyst has a beneficial long position in AMZN shares, indicating confidence in the company's future performance [2] - The article expresses personal opinions of the analyst without any compensation from the companies mentioned, ensuring an independent viewpoint [2] - Seeking Alpha emphasizes that past performance does not guarantee future results, highlighting the inherent uncertainties in investment [2]

Group 1 - MercadoLibre has a strong history of beating earnings estimates, with an average surprise of 11.15% over the last two quarters [1] - In the most recent quarter, MercadoLibre reported earnings of $10.48 per share, exceeding the expected $8.72 per share by 20.18% [1] - The previous quarter also saw a positive surprise, with actual earnings of $6.78 per share compared to an estimate of $6.64 per share, resulting in a surprise of 2.11% [1] Group 2 - Recent estimates for MercadoLibre have been increasing, indicating a positive outlook for future earnings [2] - The Zacks Earnings ESP for MercadoLibre is currently +11.42%, suggesting analysts are optimistic about its near-term earnings potential [3] - Combining the positive Earnings ESP with a Zacks Rank of 2 (Buy) indicates a strong possibility of another earnings beat [3] Group 3 - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, reflecting the latest analyst revisions [3] - Stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [2] - It is crucial to check a company's Earnings ESP before quarterly releases to enhance the likelihood of successful investment decisions [4]

Core Viewpoint - MercadoLibre (MELI) shares fell by 4.6% after JP Morgan downgraded its rating from Overweight to Neutral due to concerns over the company's credit business, rising operational costs, and potential tax rate increases [1]. Financial Metrics - MercadoLibre is currently trading at $1,971 per share, with a market capitalization of approximately $99.92 billion [1]. - The company's price-to-earnings (P/E) ratio is 71.23, indicating a premium valuation compared to its earnings [1]. - The price-to-book (P/B) ratio stands at 27.33, while the GF Value is $2,103.15, suggesting that the stock is fairly valued [1]. Financial Health Indicators - The company has a strong Altman Z-Score of 5.48, reflecting solid financial health [2]. - The Piotroski F-Score of 7 indicates a very healthy financial situation [2]. - Despite these positive indicators, recent concerns could affect future performance [2]. Operational Insights - MercadoLibre is experiencing medium-level warning signs, including being close to a 10-year high price and a price-to-sales (P/S) ratio nearing a 2-year high [2]. - The company has issued new debt, and its asset growth of 65.5% over the past 5 years has outpaced revenue growth of 57.3%, suggesting potential efficiency concerns [2]. Historical Performance - The company has impressive historical growth rates, with a 3-year revenue growth rate of 52.6% and a strong return on invested capital (ROIC) of 27.03% [3]. - Investors are advised to consider these growth factors alongside the recent downgrade and operational challenges when evaluating investments in MELI [3].

Core Viewpoint - The article highlights that while artificial intelligence (AI) has been a dominant investment theme, there are other significant investment opportunities, particularly in e-commerce, as evidenced by hedge fund managers selling shares of Nvidia and purchasing shares of Shopify and MercadoLibre [1][2]. Group 1: Shopify - Shopify offers a comprehensive commerce solution, enabling sellers to manage businesses across various channels, including online marketplaces and social media [3]. - The company holds a strong competitive position, accounting for 10% of retail e-commerce sales in the U.S. and 6% in Western Europe, recognized as a leader in e-commerce and B2B commerce solutions [3]. - Shopify's Q2 revenue increased by 21% to $2 billion, with a non-GAAP net income rise of 85% to $0.26 per diluted share, driven by strong performance in subscription software and merchant services [4]. - The company estimates its addressable market at $849 billion, with significant potential from offline retail and B2B e-commerce [4]. - Wall Street anticipates Shopify's adjusted earnings to grow at 26% annually through 2027, suggesting a current valuation of 77 times adjusted earnings may appear high, but long-term growth potential remains [5]. Group 2: MercadoLibre - MercadoLibre is the largest online marketplace in Latin America, projected to account for 29% of retail e-commerce sales in the region by 2024, up from 28.3% in 2023 [6]. - The company's ecosystem includes logistics support, ad tech software, payment processing, and lending services, enhancing convenience for merchants [6]. - In Q2, MercadoLibre's revenue surged by 41% to $5 billion, with GAAP earnings increasing by 103% to $10.48 per diluted share, reflecting a net profit margin expansion to 10.5% [7]. - The commerce segment has shown consistent sales acceleration for five consecutive quarters, supported by advertising strength and the MELI+ loyalty program [7]. - Future earnings growth is expected at 45% annually through 2025, making the current valuation of 74 times earnings appear reasonable for patient investors [8].

Core Viewpoint - MercadoLibre and PDD are two high-growth e-commerce companies with significant upside potential, but their growth trajectories and market dynamics differ substantially [1]. Company Overview - MercadoLibre operates in 18 Latin American countries, primarily generating revenue from Brazil, Mexico, and Argentina, and has developed its own logistics and digital payment platform, Mercado Pago [2]. - PDD operates solely in China, having phased out its first-party services, and offers an online agricultural platform while owning Temu, a cross-border marketplace [2]. Growth Comparison - From 2018 to 2023, MercadoLibre's revenue grew at a CAGR of 59% in USD, while PDD's revenue rose at a CAGR of 79% in USD, indicating PDD's faster but more volatile growth [3][4]. - MercadoLibre's growth was bolstered by the pandemic, while PDD experienced significant growth in 2019 and 2020, followed by a slowdown due to COVID-19 lockdowns in China [4]. Future Growth Projections - Analysts expect MercadoLibre's revenue to grow at a CAGR of 27% in USD from 2023 to 2026, while PDD's revenue is projected to rise at a CAGR of 36% in RMB [5]. Profitability Analysis - MercadoLibre became profitable in 2021, with net income growing at a CAGR of 244% in USD, while PDD also turned profitable in 2021, with net income growing at a CAGR of 178% in RMB [6]. - Future net income growth is expected to be 49% CAGR in USD for MercadoLibre and 42% CAGR in RMB for PDD from 2023 to 2026 [6]. Valuation Insights - MercadoLibre trades at about 42 times next year's earnings, while PDD trades at approximately 10 times, indicating PDD may be undervalued despite recent warnings of a slowdown [7]. Investment Recommendation - While MercadoLibre has shown strong performance, it may be due for a correction, whereas PDD's lower valuation could present a better buying opportunity for investors willing to accept volatility [8].