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Does MercadoLibre (MELI) have an Appealing Growth Prospect?

Lakehouse Capital, a Sydney-based investment manager, released its “Lakehouse Global Growth Fund” August 2023 investor letter. A copy of the same can be downloaded here. August was a relatively busy month for the Fund and persisted the portfolio’s strong fundamental performance and operating leverage. The Fund returned -0.7% net of fees and expenses for the month compared to 1.1% for its benchmark, MSCI All Country World Index Net Total Returns (AUD). In addition, please check the fund’s top five holdings to know its best picks in 2023.

Lakehouse Global Growth Fund highlighted stocks like MercadoLibre, Inc. (NASDAQ:MELI) in the August 2023 investor letter. Headquartered in Montevideo, Uruguay, Mercadolibre, Inc. (NASDAQ:MELI) is an online commerce platform that operates through Mercado Libre Marketplace and Mercado Pago FinTech platform. On December 4, 2023, MercadoLibre, Inc. (NASDAQ:MELI) stock closed at $1,599.63 per share. One-month return of MercadoLibre, Inc. (NASDAQ:MELI) was 15.69%, and its shares gained 85.34% of their value over the last 52 weeks. MercadoLibre, Inc. (NASDAQ:MELI) has a market capitalization of $80.876 billion.

Lakehouse Global Growth Fund made the following comment about MercadoLibre, Inc. (NASDAQ:MELI) in its August 2023 investor letter:

"Buenos Aires based e-commerce leader, MercadoLibre, Inc. (NASDAQ:MELI), also delivered an impressive quarterly result. Net revenue grew 32% year-on-year in U.S. dollar terms to $3.4 billion while operating margins climbed 6 percentage points to 16.0%, which was particularly pleasing given the company still remains firmly in reinvestment mode. Growth was broad based across all regions, with Gross Merchandise Volume (GMV) up 12%, 24%, and 52% in Argentina, Brazil, and Mexico (in USD terms), respectively. Management noted that they gained incremental market share in each region, especially so in their largest market Brazil, and also that fulfilment penetration rates reached an all time high - with 94% of all items sold now shipped through their managed logistics network, Mercado Envios.

Over the last several years the company has invested heavily to build out their logistics network, driving faster delivery times and lower per-unit shipping costs. In our view, this logistics network provides MercadoLibre with a very wide and expanding moat, which will prove to be a critical asset in helping protect its market share and profits from competitors over the long term. The company's fintech business, MercadoPago, also continued to show strong momentum with total payment volume (TPV) increasing 39% year-on-year to $42 billion. Unique active fintech users grew 19% to 45 million in the quarter, driven by higher engagement across all markets, and processed transactions grew 69% year-on-year to 2.1 billion. To us, Mercado Pago now seems well positioned to become a leading financial services provider in the region thanks to its scale and the critical mass of services it has developed over the years."

A customer using their phone to access an online commerce platform.

MercadoLibre, Inc. (NASDAQ:MELI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 76 hedge fund portfolios held MercadoLibre, Inc. (NASDAQ:MELI) at the end of third quarter which was 77 in the previous quarter.

We discussed MercadoLibre, Inc. (NASDAQ:MELI) in another article and shared Baron Fifth Avenue Growth Fund's views on the company. In addition, please check out our hedge fund investor letters Q3 2023 page for more investor letters from hedge funds and other leading investors.


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Disclosure: None. This article is originally published at Insider Monkey.