MELI vs. EBAY: Which Online Marketplace Stock Is the Better Pick?

Core Insights - MercadoLibre (MELI) and eBay (EBAY) are leading players in the online marketplace sector, with MELI dominating Latin America and eBay operating a global platform focused on collectibles and luxury goods [1][2] Summary of MercadoLibre (MELI) - MELI has developed a comprehensive commerce and payments ecosystem in Latin America, integrating marketplace services with Mercado Pago, which has a credit portfolio of $9.3 billion, growing 91% year over year [3][5] - Competitive pressures are increasing, particularly from TikTok Shop and Shopee in Brazil, prompting MELI to reduce shipping thresholds and seller fees, resulting in a 210 basis point decline in operating margin to 12.2% [4] - Despite regional GMV growth exceeding 30% in Brazil and Mexico and over 70% in Argentina, profitability remains under pressure due to reliance on subsidies and logistics expansion [6] - The Zacks Consensus Estimate for MELI's Q3 2025 earnings is $9.88 per share, reflecting a 26.18% year-over-year increase [6] Summary of eBay (EBAY) - eBay operates a transaction-based marketplace that does not hold inventory, relying on take rates and advertising for monetization, which allows for consistent margins [7] - In Q2 2025, eBay's revenues increased 6% year over year to $2.7 billion, with GMV growth of 6% to $19.5 billion and an operating margin of 28.4% [8] - eBay is implementing AI-driven tools and expanding livestream commerce to enhance user engagement, although the impact on transaction volumes has been limited [9][10] - The Zacks Consensus Estimate for eBay's Q3 2025 earnings is $1.33 per share, indicating an 11.76% year-over-year increase [12] Price Performance and Valuation - Year-to-date, eBay shares have risen 43.4%, while MELI shares have increased 40.6%, both outperforming the Zacks Internet-Commerce industry average of 14.1% [13] - Valuation metrics show both companies trading at stretched Price/Sales ratios, with MELI at 3.67x and eBay at 3.62x, with eBay's valuation being more defensible due to stable margins and growing advertising revenues [16] Conclusion - eBay's global exposure, stable margins, and growing advertising revenues position it favorably compared to MercadoLibre, which faces competitive pressures and margin challenges [20]