MercadoLibre today
As of 01/08/2025 16:00 Eastern
- 52 week range
- $1324.99
▼
US$2161.73
- P/E ratio
- 61.36
- Target price
- US$2247.67
MercadoLibre, Inc. NASDAQ: SHALLOWSoften referred to as the “Amazon of Latin America”, is the largest e-commerce and financial technology platform in the region, operating in 18 countries. The company connects millions of buyers and sellers through its extensive online marketplace and robust suite of services, including digital payments, logistics and financial solutions. Since its IPO in 2007, MercadoLibre’s share price has risen nearly 6,000%, cementing its position as a fast-growing player. However, with shares down nearly 20% from their 52-week high, many investors are wondering if now is the time to buy shares of the e-commerce giant.
Largest e-commerce company in Latin America
MercadoLibre’s core business is an online marketplace offering products ranging from electronics and fashion to home goods and vehicles. This is complemented by a comprehensive ecosystem including Mercado Envios for logistics, Mercado Pago for payments, Mercado Credito for financing and Mercado Shops, a turnkey business solution. The company aims to bridge the gap between Latin America’s underserved middle class and small and medium-sized businesses that historically lack access to modern retail and financial infrastructure.
MELI’s impressive growth and financial performance
The company continues to deliver impressive financial growth, with third-quarter 2024 revenue up 35% year-over-year to $5.3 billion, slightly beating analysts’ expectations. Gross merchandise volume (GMV), a key measure of e-commerce performance, grew 14% year-over-year to $12.9 billion. By comparison, total payments volume (TPV) increased 34% to $50.7 billion, up reflects the rapid adoption of fintech services. The number of monthly active users grew by 35% to 56 million, highlighting the platform’s growing reach and engagement. Although GAAP earnings per share rose 9% to $7.83, profitability faced near-term pressure due to strategic investments in fulfillment infrastructure and loan portfolio expansion.
The company also boasts a strong market capitalization of $88 billion and a cash position of $157.5 per share, highlighting its financial strength. While its forward P/E of 38.7 may seem high, its valuation looks reasonable and even offers value when you consider its rapid sales growth over the past five years and the huge potential in its target markets.
MercadoLibre, Inc. Price Chart (MELI) on Thursday, January 9, 2025
Is the pullback a reason to be concerned about a buying opportunity?
However, not all recent events have been entirely positive. The company’s shares saw a sharp sell-off following its third-quarter earnings report due to concerns about tightening margins. Operating margin fell 10 points, disappointing some investors, while the company’s net interest margin after losses (NIMAL) fell 13 points due to higher credit card growth, lending to low-risk borrowers and advance provisions for expected losses. These headwinds, while noticeable, stem from the company’s strategy of prioritizing long-term growth over short-term profitability. The opening of six new fulfillment centers during the quarter is a prime example, as these facilities will reduce margins in the short term but will ultimately improve MercadoLibre’s logistics capabilities and support future scalability.
Analysts are optimistic and institutions are actively participating
MercadoLibre MarketRank™ Stock Analysis
- Overall MarketRank™
- 100th percentile
- Analyst rating
- Moderate purchase
- Pros/cons
- Growth potential 29.3%
- Short interest level
- Healthy
- Dividend Power
- Weak
- Environmental assessment
- -1.48
- Mood News
- 0.29
- Insider trading
- Sale of shares
- Project Profit Growth
- 33.29%
See full analysis
Despite the challenges, analysts remain highly optimistic about MercadoLibre’s long-term prospects.
The stock’s consensus price target indicates upside potential of 29%, supported by the company’s dominant position in the e-commerce and fintech markets, as well as its ability to continually invest in infrastructure and innovation.
Institutional investors also showed strong confidence, with nearly 88% of shares held by large institutions, a testament to the stock’s appeal among sophisticated market participants.
Bottom line
From a technical perspective, the recent pullback brings the stock closer to multi-year uptrend support at $1,700, which corresponds with critical levels such as the 50-day and 200-day simple moving averages. This creates an attractive entry point for investors awaiting confirmation of support and a higher low.
MercadoLibre remains an attractive investment opportunity for those looking to tap into the growing e-commerce and fintech markets of Latin America. The company’s strategic investments and strong financial results suggest significant upside potential for long-term investors, even as near-term margin pressure weighs on sentiment. With its huge market presence, diversified revenue streams and ongoing focus on innovation, MercadoLibre appears well positioned to maintain its dominance and benefit from the region’s growing digital economy.
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