Core Viewpoint - MercadoLibre is positioned as a leading investment opportunity in the Latin American e-commerce sector, comparable to Amazon in the region [1] Company Overview - Founded in 1999 in Argentina and headquartered in Uruguay, MercadoLibre is the e-commerce and fintech leader in Latin America, operating in 18 countries [2] - The company is the largest marketplace in Latin America, with Brazil contributing approximately 57% of its marketplace sales, alongside significant growth in Mexico and Argentina [2] Business Model - MercadoLibre operates online auction and buying/selling platforms similar to Amazon and eBay, and provides services for users to create online stores akin to Shopify [3] - The company offers delivery services, including next-day delivery, handling 90% of packages in its system [3] - It provides fintech solutions for payments, including digital accounts, insurance, and online classified listings, with its Mercato Pago unit enabling various financial transactions [5] Financial Performance - MercadoLibre has a market capitalization of about $123 billion, making it the second-largest company in the region by this metric [6] - The company reported nearly 71 million active buyers in Q2, a 25% increase year-over-year, and gross merchandise volume rose 37% when adjusted for currency fluctuations [8] - Revenue increased by 34% year-over-year to nearly $6.8 billion, with earnings per share slightly missing expectations due to investments in free shipping [9] Growth Potential - The Latin American e-commerce market is projected to grow at an average rate of almost 11% annually through 2033, driven by a population of nearly 670 million and a combined GDP of $7.3 trillion [10][11] - Analysts expect full-year 2025 revenue to rise 35% to $28.1 billion, with earnings per share increasing about 18% to $44.42 [9] - The stock has risen 40% so far in 2025, with future earnings growth estimates of 18% this year and 51% in 2026 [11]

Core Insights - The market is currently undervaluing certain growth stocks, particularly MercadoLibre, which has shown impressive earnings growth despite limited recognition among investors [1][2][9] Company Overview - MercadoLibre is a leading e-commerce platform in Latin America, primarily operating in Brazil, Mexico, and Argentina, and is often compared to Amazon due to its comprehensive business ecosystem [4][5] - The company reported a revenue of approximately $6.8 billion for the last quarter, reflecting a 34% year-over-year increase, driven by a 21% rise in merchandise sales and a 39% increase in payment transactions [6][11] Financial Performance - Analysts expect MercadoLibre to maintain comparable revenue growth through at least 2027, with earnings projected to rise from $37.69 per share to $95.20 over the next three years [7] - The company's net income for the last quarter was $10.31 per share, falling short of analysts' expectations of $11.93 due to rising costs, particularly from free shipping initiatives [11][20] Market Position and Growth Potential - Latin America is experiencing a digital transformation similar to North America two decades ago, with increasing smartphone penetration and broadband connectivity, which positions MercadoLibre favorably for future growth [14][16] - The e-commerce market in Latin America is projected to grow at a rate of 19% annually through 2027, providing significant opportunities for MercadoLibre to capture market share [18][19] Strategic Decisions - The company's decision to lower the minimum order threshold for free shipping is seen as a long-term investment in customer engagement, despite short-term profit margin pressures [12][21] - The current stock price reflects market skepticism regarding these strategic investments, creating potential opportunities for long-term investors [20][21]