MercadoLibre vs. Block: Which Fintech-Driven Stock Has More Upside?

Core Viewpoint - The fintech market is projected to grow significantly, with MercadoLibre (MELI) and Block (XYZ) positioned to capitalize on this growth, although they face different challenges and opportunities [2][20]. Group 1: MercadoLibre (MELI) - MercadoLibre's fintech arm, Mercado Pago, reported over 64 million monthly active users, growing at more than 30% year over year, indicating strong user acquisition and engagement [3]. - The company's credit portfolio expanded by 75% year over year, with Brazil experiencing record low credit card first payment defaults due to improved scoring models [4]. - Mercado Pago has enhanced its integration within the MercadoLibre ecosystem, undergoing a rebranding to provide a more specialized digital banking experience [5]. - To strengthen its deposit base, Mercado Pago offered an attractive 120% of Brazil's CDI rate through loyalty-linked programs, boosting awareness and positioning as a leading digital bank [6]. - The Zacks Consensus Estimate for MELI's 2025 earnings is $47.92 per share, indicating a 27.14$26.53 billion [17]. Group 2: Block (XYZ) - Block's Cash App showed a 10% year-over-year increase in gross profit, with gross profit per monthly transacting active user reaching $81 [7]. - The company received FDIC approval for its in-house bank, Square Financial Services, to issue consumer loans, which is expected to enhance unit economics [7]. - Despite these strengths, Cash App's gross profit fell short of internal expectations due to weaker inflows and discretionary spending, leading to a revised full-year guidance of 12$9.96 billion [9]. - The Zacks Consensus Estimate for XYZ's 2025 earnings is $2.72 per share, reflecting a 19.29$24.98 billion [18]. Group 3: Price Performance and Valuation - Year-to-date, MELI shares have increased by 47.2%, while XYZ shares have decreased by 35.3%, with MELI benefiting from strong earnings reports [11]. - In terms of Price/Cash Flow, Block shares trade at 25.87X, compared to MELI's 17.07X, making MELI more attractive as a high-growth stock [14].