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MercadoLibre, Inc. (MELI)

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1,470.24+11.60 (+0.80%)
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  • M
    Is the recent downturn of MercadoLibre an opportunity?

    Here are facts – not hype:
    MercadoLibre (MELI) is one of the largest providers of e-commerce services in Latin America, operating in 18 countries. The use of e-commerce in Latin America is relatively low compared with more developed regions however, it's growing fast, providing a big market opportunity for MercadoLibre.

    MercadoLibre is essentially the Amazon of Latin America.
    Amazon was founded in 1994 and MercadoLibre was founded in 1999.
    Amazon currently dwarfs Mercado in revenue: 96 billion vs. 1.1 billion.
    However, looking a little deeper we see that MRQ (most recent quarter) YOY (year over year) revenue growth for Amazon is 37% while it is 85% for MercadoLibre.

    We think MercadoLibre will enjoy continued growth due to it’s its smaller size, higher growth profile, and massive market for both e-commerce and fintech. MercadoLibre is a solid pick for patient investors with a long-term perspective. We feel the recent sell-off presents an opportunity

    It’s 52 week high is $2,020.00. In the recent sell-off it fell as low as $1,594.00

    MercadoLibre (MELI) reported fourth-quarter results late Monday March 1, 2021 that topped revenue estimates but because it missed analysts estimates on earnings MELI stock fell.

    The bad news:
    The Argentina-based e-commerce company reported an adjusted loss of $1.02 a share on revenue of $1.3 billion. Analysts expected MercadoLibre to report earnings of 16 cents on revenue of $1.2 billion.

    The company's gross profit margin slipped to 37% from 46% in the prior-year quarter, the result of aggressive pricing and increased shipping costs during the holiday quarter.  

    The good news:
    MercadoLibre continued its triple-digit growth streak in 2020.
    Revenue increased 97% from the year-ago period, in dollars. On a foreign-exchange neutral basis it jumped 149%.
    The results were driven by online retail that soared 124%.

    Importantly, fintech revenue from its digital payments business jumped 60%. 

    MercadoLibre continued to invest heavily in future growth, doubling its research and development expenses to $87.3 million up 115%, while also increasing its sales and marketing costs. This resulted in a net loss of $51 million and a loss per share of $1.02, marking an improvement from a loss of $1.11 in the prior-year quarter. However, we see this as a solid investment for future growth.

    Customers continue to flock to the company's e-commerce and digital wallet offerings. Unique active users grew 71% year over year to 74 million, while the number of items sold climbed to 229 million, up 110%. Mercado Envios, its shipping solution, continued to be a growth industry, as items shipped surged to 214 million, up 131%.

    Unique active users grew 71% in the quarter, reaching 74 million.

    Gross merchandise volume reached $6.6 billion, up 69% in dollars and 110% of a foreign-exchange neutral basis.

    Brown Capital Management: “The MercadoLibre platform is growing quickly; it more than doubled the value of items sold in the latest reported quarter versus the prior-year period. Given that e-commerce is only 2.5% of total retail sales in Latin America, MercadoLibre has tremendous room for growth as it trends towards the 10%-plus penetration rate seen in the U.S. and Western Europe. We are particularly encouraged by the company’s significant investment in distribution as well as its shift into the sales of first-party goods, both of which reduce delivery times for customer orders.”
    While the high growth in the shopping platform is notable, we believe there is a larger opportunity in the company’s payment platform, called Mercado Pago. In the last reported quarter, transaction volumes that were independent of the shopping platform nearly tripled compared to the prior-year period.”
    - Brown Capital Management

    And according to e-marketer, Latin America is the world's fastest growing region for e-commerce,

    We feel there is a long runway for the future growth of MercadoLibre and the current sell-off presents a compelling opportunity. MercadoLibre appeared to bottom today and we are seeing consolidation and an upward trend.

    As always – do your due diligence and be careful out there.
    Best of fortune to all
    Brown Capital Management International Equity Fund recently released its Q4 2020 Investor Letter, a copy of which you can download here. In the fourth quarter of 2020, the indexes that represent international equities rose: the MSCI ACWI ex USA Index
    Brown Capital Management International Equity Fund recently released its Q4 2020 Investor Letter, a copy of which you can download here. In the fourth quarter of 2020, the indexes that represent international equities rose: the MSCI ACWI ex USA Index
  • B
    "Fortitude is the marshal of thought, the armor of the will, and the fort of reason" Francis Bacon

    Hang tough kids the best is yet to come. MERCADOLIBRE is the fort of reason. Boolean
  • r
    Thanks everyone.
    I noted the increase in capital expenditures. I hope to understand what operating expenses (that is, not capital) drove down their earnings - especially given such a top line blowout..... COVID-related? Shipping or marketing/cutsomer acquisition?
  • V
    Virtual Bookkeeper
    Fastest quarterly growth EVER!!! MELI is following the same strategy as AMZN...crushing revenue growth at the expense of margins. MELI is investing heavily in improving the customer experience with same-day shipping, better & faster delivery, reducing theft, etc. Clearly, same day shipping will impact margins but at this stage revenue growth is far more important. Due to this strategy, they are gaining market share.
  • B
    AGAIN, though brutal to watch historically since I bought in the 60's Mercado goes through these waves and then moves ever higher due to its massive growth. So is this time different...perhaps BUT I DON'T THINK SO as I have been on this ride for so long...same happened with Amazon and then your fear increases and you sell out only to find that you should have kept a long term view. I am looking at tomorrow when Jerome Powell stabilizes markets and the rout ends. Boolean
  • r
    I sent email to MELI Investor Relations re: earnings release date - here is response I just received:

    We have not announced a date yet. We will do so later in the week and will post to IR website and news wires. We are required by the SEC to announce two business days prior to the call.
  • M
    Sell off after hours, but I liked what I heard during the earnings call. Growth at the expense of profit is a good strategy to scale.
  • J
    Next real hard stop looks like 1226 any chart experts out there?
  • B
    I expect to see rapids price recovery now that February one of the worst months for the market is over...and with infrastructure talk and fear over rising rates to subside markets will do well....barring some big spike in THE VIRUS. Like I said before - bought in the 60's and have not sold a sharre and it always goes up big then gets crushed and then goes up more than it did before...it is basically A STAIRWAY TO HEAVEN.... just sit back and relax...this ain't nothing to fear. Boolean
  • r
    Is that a miss?
  • L
    Wonderful quarter and year! Capture the market and improve the customer experience before you even worry about profit. The path to profitability is there and we shld see it clearly in the upcoming years. Taking a leaf from Amazon and this will give us the return much sooner! $2000 by end of year!
  • B
    The gut pain you feel -- IGNORE IT. Any thought that this is just going to go away is foolish and posters trying to scare you and jump on your fear is loathsome but typical -- IGNORE IT. I have been through this as I keep telling you from the time I bought in the 60's....it is TYPICAL it is not NEW. This was a more pronounced hammering but this is setting up to blow through 2k later this year. Selling I suspect was more pronounced by selling from some tech funds due to sellers of their funds....that too should be done. Look outward for where this is going kids....for me no fear as I have seen it all here before and it goes higher than before....PAY-tience PAYS. Boolean
  • D
    I grabbed another 10 shares today @ $1,425.00. This will be back to $1,800.00 by mid summer. I'm in it for the long haul.
  • A
    Wow. Oversold by a mile. Thank you. Thank you. Thank you for the great buy point.
  • r
    MELI is an ultra long term holding for me. Their total addressable market is massive and largely untapped. At this point if Amazon were to enter Latin America they would have a lot of catching up to do. Below 1700 is bargain territory for this stock. Long term MELI will go back to 2000 and eventually 3000. This is a hyper growth story. Every dip should be bought.
  • E
    El Canal Coreano
    So the $MELI price is falling down, because their earning couldn't live up to the expectations? If this is the only reason why..then why not buying? I am actually asking since i am considering re-buying this stock.
  • R
    Will be Green Tomorrow
  • R
    where is the earnings? supposed to be released today? previous post says thursday.. but there is nothing listed on the Nasdaq earnings site ?
  • B
    XIAO - yes when I looked at the small rise I too was like--- #$%$ but look at Amazon also up just a smidgeon percentage wise....and yes Amazon as expected has not sold off as much as Mercado BUT...I hold firm that this sector is going to see huge money flow again within months unless the virus takes over as it mutates.... Some tech funds must have had to sell off stock to cover redemptions but that will be over now and I remain BULLISH because...I have seen this all before and I will not do what I did with Amazon as the story is the same....look at Alibaba it held up well. Boolean
  • P
    Buying opportunity here.......the 12 month price target is $1,925