ZACKSยท2025-04-10 16:20Core Perspective - MercadoLibre (MELI) and eBay (EBAY) represent two distinct approaches in the online marketplace sector, with MELI focusing on high-growth Latin American markets and eBay operating as a mature global player [1][2] Summary of MELI - MELI has developed a seller-focused ecosystem tailored to the needs of Latin American businesses, featuring tools like MyPage for storefront customization and a dynamic pricing tool for competitive positioning [3] - The company reported $7.92 billion in operating cash flow for 2024, a 54.05% year-over-year increase, driven by a net income of $1.91 billion and revenues of $20.77 billion, reflecting operational efficiency and long-term profitability [4] - As of December 31, 2024, MELI's balance sheet showed $2.63 billion in cash and cash equivalents, providing flexibility for strategic initiatives [5] - The Zacks Consensus Estimate for MELI's 2025 earnings is $47.50 per share, indicating a 26.03% year-over-year growth, with revenues expected to reach $25.89 billion, a 24.59% increase [6] Summary of EBAY - eBay is leveraging generative AI technology to enhance seller tools, but has faced challenges in new customer acquisition, with active buyers declining by 2% in 2023 and only increasing by 1% in 2024 [8][9] - The company generated $2.41 billion in operating cash flow for 2024, a 0.49% year-over-year decline, despite an 8% increase in non-GAAP net income to $2.45 billion and a 2% rise in revenues to $10.3 billion [10] - For 2025, eBay's earnings consensus is $5.30 per share, suggesting an 8.61% growth from 2024, while revenues are expected to decline by 0.29% [11] Stock Performance and Valuation - In the past 12 months, MELI shares have appreciated by 31.4%, outperforming eBay's 19.4% increase and the Zacks Internet-Commerce industry's decline of 10.1% [13] - MELI trades at a forward Price/Sales ratio of 3.64, higher than the industry average of 2.01, while eBay's ratio is 2.72, indicating a valuation premium for MELI due to its growth trajectory [15] - eBay's disconnect between earnings growth and declining cash flow raises concerns about its operational efficiency and future earnings potential [18] Investment Outlook - MELI is positioned as a better investment opportunity due to its rapid user base expansion and consistent profitability, with plans to increase investments in Mexico by 38% and Brazil by 48% in 2025 [19] - MELI's superior execution and market penetration in Latin America support its status as the preferred investment choice, with a Zacks Rank of 2 (Buy) compared to eBay's 3 (Hold) [20]