Is MercadoLibre Stock a Buy, Sell or Hold at a P/E Multiple of 40.01X?

Valuation and Market Performance - MercadoLibre's current P/E multiple of 40.01X is significantly higher than the Zacks Internet - Commerce industry average of 25.73X, raising concerns about valuation sustainability despite its market leadership and growth trajectory [1] - The company's P/E F12M ratio indicates a stretched valuation [3] - The stock has returned 14.5% over the past year, underperforming the Zacks Retail-Wholesale sector's growth of 31.4% [12] Financial Results and Strategic Investments - MercadoLibre reported a 35% YoY increase in net revenues to $5.3 billion and an 11$397 million in Q3 2024 [4] - Operating margin declined to 10.5% from 20% YoY due to substantial investments in infrastructure and business expansion [4] - The company opened five new fulfillment centers in Brazil and one in Mexico, reflecting its commitment to infrastructure growth but requiring significant capital expenditure [5] Credit Business Expansion - MercadoLibre's credit portfolio grew 77% YoY to $6 billion, with credit card TPV showing a 166$25.66 billion, indicating a YoY growth of 24.25%, with earnings pegged at $44.65 per share, suggesting a 34.31% YoY rise [11] - Earnings estimates have moved south by 0.6% over the past 30 days, indicating caution [11] - The company's strategic investments, while necessary for long-term growth, may continue to pressure margins in the near term [9] Investment Recommendation - Given the premium valuation, ongoing margin pressures, and potential risks from rapid credit expansion, investors might benefit from waiting for a more attractive entry point in 2025 [15] - Current holders can maintain their positions due to the company's strong market leadership and long-term growth potential, but new investors should wait for multiple compressions or stronger evidence of improved profitability metrics [16][17]