Core Insights - The article emphasizes the importance of in-depth research and insights for informed investment decisions in the Latin American equity market [1] Group 1 - The company has over 5 years of experience in equity analysis specifically focused on Latin America [1] - The research provided aims to assist clients in making informed investment decisions [1]

Core Insights - The article discusses the initiation of coverage on MercadoLibre, Inc. (NASDAQ: MELI) stock, which was rated as a "Buy" during a correction period in April 2024 [1] - The analysis highlights the marginality decline experienced by MELI in Q4 FY2023, indicating potential investment opportunities [1] Company Analysis - MercadoLibre, Inc. is positioned in a correction phase, which may present a buying opportunity for investors [1] - The company has shown resilience and potential for recovery, as indicated by the analyst's positive outlook despite recent challenges [1] Analyst Background - The chief investment analyst, Daniel Sereda, operates within a family office and has extensive experience in navigating diverse asset classes and information [1] - The investing group, Beyond the Wall Investing, provides insights similar to those prioritized by institutional market participants, enhancing the quality of analysis available to investors [1]

Core Insights - Investors showed a lack of enthusiasm regarding the latest reported figures from MercadoLibre, which is often referred to as the Amazon of Latin America [1] - MercadoLibre is achieving growth rates that surpass those of its U.S. counterpart, Amazon [1]

Group 1 - The company aims to invest in firms with strong qualitative attributes, purchasing them at attractive prices based on fundamentals, and holding them indefinitely [1] - The investment strategy involves managing a concentrated portfolio to avoid underperformers while maximizing exposure to high-potential winners [1] - The company plans to publish articles on selected companies approximately three times a week, with detailed quarterly follow-ups and ongoing updates [1] Group 2 - The analyst has no current stock, option, or derivative positions in any mentioned companies and does not plan to initiate any within the next 72 hours [2] - The article reflects the analyst's personal opinions and is not influenced by any compensation from companies mentioned [2] - There is no business relationship between the analyst and any company whose stock is discussed in the article [2]

Core Insights - MercadoLibre, a prominent player in Latin American stocks, experienced a decline of over 15% following the release of its Q3 earnings report despite achieving a significant revenue growth of 35% year-over-year, surpassing estimates [1] Financial Performance - The company reported a year-over-year revenue growth of 35%, indicating strong performance in its financial results [1] Market Reaction - The stock's dip of more than 15% post-earnings release suggests a potential disconnect between market expectations and the actual performance, despite the positive revenue growth [1]

Financial Performance - Net revenues and financial income for the nine months ended September 30, 2024, reached $14,718 million, a 37.6% increase from $10,698 million in the same period of 2023[11]. - Gross profit for the nine months ended September 30, 2024, was $6,828 million, compared to $5,540 million in 2023, reflecting a growth of 23.2%[11]. - Net income for the nine months ended September 30, 2024, was $1,272 million, up 55.0% from $822 million in the same period of 2023[14]. - Basic net income available to shareholders per common share increased to $25.09 for the nine months ended September 30, 2024, compared to $16.40 in 2023, marking a rise of 52.0%[12]. - Operating expenses for the nine months ended September 30, 2024, totaled $5,017 million, compared to $3,668 million in 2023, indicating a 36.8% increase[11]. - The company reported a net cash provided by operating activities of $4,994 million for the nine months ended September 30, 2024, compared to $3,212 million in 2023, indicating a 55% increase[20]. - The company reported a net income before income tax expense of $1,669 million for the nine months ended September 30, 2024, compared to $1,323 million for the same period in 2023, reflecting a year-over-year increase of approximately 26%[120]. Assets and Liabilities - Total assets increased to $22,623 million as of September 30, 2024, up from $17,646 million at December 31, 2023, representing a growth of 28.1%[9]. - Total current liabilities rose to $14,313 million as of September 30, 2024, from $11,297 million at December 31, 2023, an increase of 26.8%[9]. - Total equity increased to $4,002 million as of September 30, 2024, from $3,071 million at December 31, 2023, representing a growth of 30.2%[9]. - The company’s total liabilities as of September 30, 2024, were $16,685 million, compared to $12,905 million at the end of 2023[140]. - The company’s total short-term investments rose to $4,511 million as of September 30, 2024, compared to $3,480 million at the end of 2023, marking an increase of 29.6%[100]. Investments and Financial Activities - Long-term investments surged to $1,226 million as of September 30, 2024, compared to $162 million at December 31, 2023, reflecting a significant increase of 658.5%[9]. - The company’s net cash used in investing activities was $6,159 million for the nine months ended September 30, 2024, compared to $2,536 million in 2023, indicating a significant increase in investment activity[20]. - The company has committed to purchase cloud platform services totaling $1,000 million, with payments scheduled between August 2024 and February 2030[154]. - The company entered into a $400 million amended and restated revolving credit agreement on September 27, 2024, with interest rates based on Term SOFR plus an interest margin[169][170]. Market Presence and Operations - The company operates e-commerce platforms across 18 countries in Latin America, enhancing its market presence and user base[24]. - The company expects continued growth in both commerce and fintech segments, with a focus on expanding its market presence in Latin America[39]. - MercadoPago S.A. Compañía de Financiamiento began operations in Colombia on April 22, 2024, offering the "Ordinary Deposit" product, subject to regulatory requirements[87]. Regulatory and Compliance - The company has transitioned from a non-regulated to a regulated business, which has influenced its financial operations and reporting[29]. - The company plans to continue adapting to regulatory trends, which may impact future financial performance and operational strategies[32]. - The Central Bank of Brazil's new capital requirements will gradually increase from 6.75% in July 2023 to 10.50% by January 2025 for the company's regulated Brazilian subsidiaries[77]. Credit and Risk Management - The company’s provision for doubtful accounts increased to $1,331 million in the nine months ended September 30, 2024, from $751 million in the same period of 2023, a rise of 77%[20]. - The allowance for doubtful accounts for loans receivable was $1,612 million as of September 30, 2024, compared to $1,084 million at the end of 2023, reflecting a rise of 48.5%[107]. - The total past due loans as of September 30, 2024, amounted to $1,723 million, up from $1,116 million as of December 31, 2023, representing a 54.5% increase[106]. Currency and Foreign Operations - The average exchange rate for the nine-month period ended September 30, 2024, increased by 261.1% compared to the previous year, reflecting significant currency fluctuations[59]. - The company’s total assets located in foreign jurisdictions amounted to $2,405 million as of September 30, 2024, compared to $2,321 million as of December 31, 2023[26]. - The Argentine inflation rate for the nine-month period ended September 30, 2024, was 101.6%, significantly impacting the company's operations in the region[58]. Taxation and Benefits - The company recorded an income tax benefit of $6 million and $1 million for the nine and three-month periods ended September 30, 2024, compared to $35 million and $14 million for the same periods in 2023, respectively[69]. - The estimated effective tax rate decreased from 38.1% to 23.8% for the nine-month period ended September 30, 2024, primarily due to lower taxable foreign exchange gains[66]. - The company recorded $17 million of PIS and COFINS tax benefits arising from ICMS tax incentives as of September 30, 2024[148]. Shareholder Information - The weighted average number of common shares outstanding for earnings per share was 50,697,442 for the nine-month period ended September 30, 2023[92]. - The net income available to common stock for the nine-month period ended September 30, 2024, was $1,272 million, compared to $822 million for the same period in 2023[91]. - Net income per share for the nine months ended September 30, 2024, was $25.09, a 53% increase from $16.40 in the same period of 2023[96].

Core Viewpoint - MercadoLibre's stock declined nearly 16% following disappointing profit results for Q3 2024, despite strong revenue growth [1][4]. Financial Performance - Q3 revenue reached $5.3 billion, representing a 35% year-over-year increase and exceeding expectations [2]. - The company's net profit margin fell to 7.5%, down from 9.5% in the same quarter last year, resulting in earnings per share (EPS) of $7.83, which was below the expected EPS of around $10 [2]. Management's Explanation - Management addressed investor concerns by explaining that margin contraction was due to increased investments in credit card usage and logistics services, which required setting aside more funds for potential losses [3]. - Investments in infrastructure were also highlighted as a cost factor impacting margins [3]. Investor Sentiment - Despite management's explanations, investor dissatisfaction was evident in the stock price reaction [4]. - The company still generated nearly $400 million in net income for Q3, indicating strong overall performance and capacity for future investments [5]. Future Outlook - Investors are encouraged to monitor e-commerce adoption trends and the growth of MercadoLibre's credit portfolio in upcoming quarters [6]. - The company has a history of successful reinvestment into its business, providing a basis for optimism regarding future growth [6].

Core Insights - MercadoLibre (MELI) reported Q3 2024 earnings of $7.83 per share, missing the Zacks Consensus Estimate by 30.52% but increasing 9.4% year over year [1] - Revenues rose 35% year over year to $5.3 billion, surpassing the Zacks Consensus Estimate by 1.11% [1] - The growth in total revenues was driven by commerce and fintech, which grew 48% and 21% year over year, respectively [1] Revenue Breakdown - Brazil generated net revenues of $2.91 billion, accounting for 54.8% of total revenues, with a year-over-year increase of 41.2% [3] - Argentina's market produced revenues of $1.03 billion, representing 19.4% of total revenues, growing 13.5% year over year [3] - Mexico's net revenues reached $1.14 billion, making up 21.6% of total revenues, soaring 44% year over year [3] - Other countries contributed $221 million, reflecting a 39% year-over-year increase [4] Key Metrics - Gross Merchandise Volume (GMV) was $12.9 billion, up 71.2% year over year on an FX-neutral basis, beating the consensus mark by 0.91% [5] - The number of successful items sold increased by 27.7% year over year to 456 million, while successful items shipped rose 29.4% to 453 million [5] - Total Payments Volume (TPV) surged 72.7% year over year on an FX-neutral basis to $50.6 billion, exceeding the Zacks Consensus Estimate by 2.96% [6] - Total payment transactions increased by 47.5% year over year to 2.93 billion, with fintech monthly active users totaling 56 million, up 33.3% year over year [6] Operating Details - Gross margin for Q3 was 45.9%, down from 53.6% in the previous year [7] - Operating expenses rose 43.7% year over year to $1.88 billion, representing 35.4% of revenues, an increase of 60 basis points year over year [7] - Operating margin decreased to 10.5% from 20.9% in the year-ago period [7] Balance Sheet - As of September 30, 2024, cash and cash equivalents were $2.16 billion, down from $2.82 billion as of June 30, 2024 [8] - Short-term investments stood at $1.1 billion, with net debt at $1.9 billion at the end of the quarter [8]

Core Viewpoint - MercadoLibre's stock price has significantly declined following disappointing Q3 results, presenting a potential investment opportunity due to ongoing business investments in fintech and merchant segments [1][2]. Financial Performance - MercadoLibre reported Q3 revenue of $5.31 billion, reflecting a 35.1% increase year-over-year, surpassing consensus estimates [2]. - The company achieved double-digit growth across all regions and segments, with total payment volume, gross merchandise volume, and unique buyers increasing by 34%, 14%, and 21% respectively [2]. Investment Strategy - The company is investing in six new fulfillment centers to enhance its eCommerce and fintech capabilities while ensuring high user satisfaction [2]. - Despite the recent earnings miss, the company maintains a high double-digit growth trajectory, expected to continue into 2025 [2][3]. Analyst Sentiment - Analysts have shown a positive sentiment towards MercadoLibre, with 88% rating it as a Buy or higher, and a consensus price target suggesting a potential upside of 20% to 25% from current levels [4]. - The stock is currently rated as a "Moderate Buy" with a projected earnings growth of 31.67% [3][4]. Market Position - The recent price drop is viewed as a market signal, with potential for recovery and reaching $2400 by early summer 2025 if support levels hold [6]. - The company is considered a high-quality target for stock split investors, which could enhance accessibility for smaller traders and indicate strong underlying value [5].

Stock Price and Earnings Report - One share of MercadoLibre stock costs close to $2,000 [1] - The video discusses MercadoLibre's third-quarter earnings report [1] - Stock prices used were from the trading day of Nov 6, 2024 [1] - The video was published on Nov 6, 2024 [1]