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Here's How Much You'd Have If You Invested $1000 in MercadoLibre a Decade Ago

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How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.

The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.

What if you'd invested in MercadoLibre (MELI) ten years ago? It may not have been easy to hold on to MELI for all that time, but if you did, how much would your investment be worth today?

MercadoLibre's Business In-Depth

With that in mind, let's take a look at MercadoLibre's main business drivers.

Buenos Aires, Argentina based MercadoLibre, Inc. is one of the largest e-commerce platforms in Latin America. The company is a market leader in e-commerce in Brazil, Argentina, Colombia, Chile, Ecuador, Costa Rica, Peru, Mexico, Venezuela and Uruguay based on unique visitors and page views.

The company also operates e-commerce platform in Honduras, Nicaragua, Dominican Republic, Salvador, Panama, Guatemala, Paraguay, Bolivia, and Portugal.

MercadoLibre reported revenues of $3.97 billion in 2020. The company offers a bunch of six integrated e-commerce services:

MercadoLibre Marketplace enables businesses and individuals to conduct sales, purchase online and list their merchandise.

MercadoLibre Classifieds offers online classified listing services for motor vehicles, real estate and services. These listing charge only optional placement fees and hence they are different from Marketplace listings.

MercadoPago FinTech platform allows users to send and receive payments seamlessly within MercadoLibre’s marketplace. Outside of this, merchants are allowed to process payments via websites, mobile apps and mobile point of sale.

MercadoLibre advertising program enables advertisers and seller to display their product ads on the company’s webpages.

MercadoShops online webstores solution aids users in managing and promoting their online stores.

MercadoEnvios logistics service provides integration with third-party carriers and logistics service providers to the sellers on the company’s platform.

MercadoLibre has four reportable geographic segments— Brazil, Argentina, Mexico and Other Countries. In 2020, Brazil generated 55.2% of the company’s revenues. Argentina, Mexico and Other Countries generated 24.7%, 14.5% and 5.6% of revenues, respectively.

Effective Dec 1, 2017, MercadoLibre deconsolidated its Venezuelan subsidiaries. The company no longer includes the balances, results of operations and cash flows of the Venezuelan subsidiaries in its consolidated financial statements.

Bottom Line

Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in MercadoLibre ten years ago, you're likely feeling pretty good about your investment today.

According to our calculations, a $1000 investment made in August 2011 would be worth $29,676.74, or a 2,867.67% gain, as of August 23, 2021. Investors should keep in mind that this return excludes dividends but includes price appreciation.

In comparison, the S&P 500 gained 295.33% and the price of gold went up -6.17% over the same time frame.

Going forward, analysts are expecting more upside for MELI.

MercadoLibre’s second-quarter results benefited from increasing commerce and fintech revenues. Further, strengthening online-to-offline offerings were tailwinds. Furthermore, growing adoption of MercadoPago and robust mobile-point-of-sale business contributed well to total payment volume growth. Improvement in the level of transaction per buyer aided its quarterly performance. Rapid adoption of Mobile Wallet remained a positive for the company. Also, well-performing Mercado Fondo and Mercado Credito drove the results. Additionally, robust shipment growth via MercadoEnvios and rising penetration of managed networks remained tailwinds. It is to be noted that the stock has outperformed its industry on a year-to-date basis. Yet, rising expenses related to warehousing, free shipping subsidies and mPOS discounts are impacting margins.

The stock is up 10.70% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 4 higher, for fiscal 2021. The consensus estimate has moved up as well.
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