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MercadoLibre Q4 Results Help Lift Argentina ETFs

This article was originally published on ETFTrends.com.

While most of the market slipped on Wednesday, Argentina country-specific exchange traded funds still managed to climb higher, strengthening on phenomenal results from Latin American e-commerce giant MercadoLibre (MELI) fourth quarter numbers.

On Wednesday, the Global X MSCI Argentina ETF (ARGT) was up 3.2% and the iShares MSCI Argentina and Global Exposure ETF (AGT) was 3.3% higher. Almost all of the two Argentina-related ETF holdings were in the red on Wednesday, with the exception of its large position in MercadoLibre.

MercadoLibre shares surged 18.0% Wednesday, following its better-than-expected fourth quarter results. MELI makes up 23.7% of ARGT and AGT's underlying holdings.

The Latin American e-commerce company revealed sales climbed almost 20% to $428 million, compared to the $410 observers were looking for, The Motley Fool reports.

The performance looked even better when taking out the impact of the U.S. dollar. On a currency neutral basis, MercadoLibre showed a top line that surged 62%, and the company would have been profitable if one took out the $3.9 million in foreign exchange losses for the period.

CFO Pedro Arnt was happy with how things turned out for the end of the year, especially with rising user growth and sales growth in local currency terms.

“I am pleased to report another quarter of solid performance in our business, across our key business units. During the 4Q’18 we have continued our efforts to re-calibrate our P&L with initiatives such as continued changes to our discounted shipping initiatives, and free listing caps, which allowed us to improved enhanced marketplace monetization. As a consequence our Net Revenues accelerated for the 3rd consecutive quarter, reaching 61.8% YoY on an FX neutral basis,” Arnt said.

As a result, Stifel Nicolaus reiterated its "buy" rating for the e-commerce giant, according to Fairfield Current.

“We believe the long-term opportunity for MercadoLibre remains attractive given its leadership position in eCommerce and the attractive growth opportunity in the payments business. We reiterate our Buy rating and are increasing our price target to $460 after raising our long-term revenue and operating income forecasts," Stifel Nicolaus analysts said.

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