What Is Really Happening to $MELI Stock?
The recent 20% dip in MercadoLibre’s stock price reflects mounting geopolitical and macroeconomic concerns rather than any fundamental flaw in the business. The primary macro headwind was Brazil’s announcement of a $12B spending cut through 2026, paired with tax hikes on the wealthy and exemptions for lower-income citizens -- which utterly failed to inspire confidence among investors. In the short term, MercadoLibre felt the blow.
But the numbers tell a more compelling story -- one of a business defying its environment with an audacious commitment to growth. In Q3 2024, MercadoLibre posted revenue of $5.3B, up 35% YoY and surpassing analyst expectations. Strip away currency distortions, and that growth balloons to an extraordinary 103%. Even GMV, seemingly modest at a 14% increase, reveals its true strength when paired with a 28% surge in items sold. This isn’t mere survival -- this is adaptation at scale, fueled by deepening consumer trust across volatile markets like Argentina.
MercadoLibre isn’t just a marketplace -- it’s an ecosystem -- a seamless integration of commerce, finance, and innovation. At the core of this ecosystem is Mercado Pago, its fintech powerhouse. With 35% growth in monthly active users, now numbering 56M, and nearly $8B in assets under management, Mercado Pago exemplifies MercadoLibre’s knack for turning complexity into opportunity. Concerns about the risks tied to its 65% credit portfolio expansion have been met with a steady hand from management, emphasizing strong underwriting and a pivot toward lower-risk customer segments.
This is not a company content to rest on its laurels. MercadoLibre’s bold logistics investments -- doubling fulfillment centers in Brazil by 2025 -- signal a commitment to faster delivery and broader regional reach. Simultaneously, Meli Más, its loyalty program, weaves together cashback rewards, installment options, and streaming perks into an irresistible package for consumers. The vision is clear: a "super app" for Latin America, where every transaction deepens engagement and reinforces MercadoLibre’s position as the indispensable partner for millions.
And yet, the numbers suggest Wall Street is sleeping on this powerhouse. Trading at historically low EV/gross profit and price/free cash flow multiples, MercadoLibre offers a rare blend of growth and value. While Q3 profitability metrics softened under the weight of strategic investments, the company’s track record speaks volumes -- prioritizing long-term market dominance over fleeting quarterly wins. Zoom out, and the potential is staggering. E-commerce penetration in Latin America remains at just 15%, a gap that MercadoLibre is uniquely positioned to close at an accelerated pace.
Yes, macroeconomic volatility persists, and yes, currency headwinds will undoubtedly test MercadoLibre’s resilience. But such noise fades in the face of a business model designed not only to endure but to thrive. Its regional expertise, paired with its relentless focus on innovation, gives MercadoLibre a competitive moat that global giants like $Amazon.com(AMZN)$ and Shein struggle to breach. For those willing to see beyond the noise and embrace a long-term perspective, MercadoLibre offers a MASSIVE opportunity.
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