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Mercadolibre, Inc. Message Board

  • stokker3 stokker3 Oct 6, 2009 1:42 PM Flag

    Dollar Weakness

    Is absolutely perfect for MELI's bottom line. Earnings really have no choice in 3rd and 4th quarter but to beat expectations.

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    • Last quarter ending 1 Brazilian Real equalled 49 cents US Dollar
      This quarter ending 1 Brazillian Real equals 56 cent US Dollar

      The quarter that they will report is now over at 56cent conversion. So any weakness in the dollar or strength in the Brazilian Real over the next few days or weeks will not affect the EPS number we get on the next earnings report

      But there will be a noticeable improvement in the REAL appreciation conversion and it will be a focus by the CFO on the call.

      MELI has everything going for it plus the Merger and Aquisition Activity and Currency conversion could not be more positive. We are going higher.

      • 2 Replies to boxtime4
      • I think I was pretty clear in my post. The dollar weakness is going to help 3rd and 4th quarter earnings. The point I didn't mention is that earnings estimates have not been adjusted up by the few analysts that follow this company in the last 60 days. This quarter's estimate went from 0.16 to 0.17 and the 4th quarter has not changed from 0.19 at all in the last 60 days. That means upside surprise is likely. While we all may understand that currency is not a permament addition to growth, we should also realize that 2 nice upside earnings surprises in a row will most certainly cause the stock to rocket higher over the next few months, realistic or not.

      • Should have added to my last post that my eye is on PAGO payments. This is what every aquisition canidate is wathcing more than anything. So I should say MELI has everything going for it as long as PAGO is growing faster and shows some big gains. I think it will.

    • yes, weak dollar good for meli earnings short term but some analysts may account for weak dollar so not necessarily a boost to beating earnings estimates. Accelerating growth of brazil economy, increasing internet penetration in LA, more meli users, increased technology efficiencies in platform, little local competition etc also favor increased meli growth.

      But longer term a stronger real etc. vs dollar could weaken brazilian export competitiveness and so slow economic growth so weakening dollar may have a long-term limit as to how much it helps meli.

      • 1 Reply to yelyacs
      • good point...but currency swings are something management can't really control outside of hedging. Currency rates will do what they will should focus more on understanding the economics of the business that you own, and the industry that it is in, rather than focus on currency rates. Sure currency is sand in the jar, but knowing the business and how it makes money is the rock in the jar. Get the rocks right.

    • Educate me, cuz I didn't think there was any dollar exchanging going on at MELI, that this is mostly a play on LatAm's internal growth. MELI may beat but I've really not counted on currency swaps at all.

    • beat bigggggggggggggggggg

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