MercadoLibre (MELI) Seems Ripe to Run; But its Time to Shine Has Yet to Come

/ By / MELI
Stock (Symbol)

MercadoLibre (MELI)
Stock Price

$1945
Sector
Retail & Travel
Data is as of
March 10, 2025
Expected to Report
May 8
Company Description
MercadoLibre Inc is a Uruguay-based e-commerce business facilitator of Argentinian origins.

The e-commerce products enable retail and wholesale via Internet platforms designed to provide users with a portfolio of services to facilitate commercial transactions.

The Company’s geographic coverage includes 18 countries of Latin America.

The primary offer is an ecosystem of six integrated e-commerce services: the Mercado Libre Marketplace, the Mercado Libre Classifieds service, the Mercado Pago payments solution, the Mercado Credito financial solutions, the Mercado Envios logistic solutions including shipping, the Mercado Ads advertising platform and the Mercado Shops digital storefront solution. Source: Refinitiv
Sharek’s Take
David SharekMercadoLibre (MELI) continues to dominate e-commerce and fintech in Latin America, maintaining strong momentum across key markets. The company saw 37% revenue growth last quarter, driven by 51% growth in e-commerce and 25% growth in fintech. This continued growth was thanks to MELI’s management prioritizing long-term investments in logistics and technology. Improvements enabled MELI to surpass 100 million unique buyers in Marketplace (ecommerce) and 60 million monthly active users in the fintech platform for the first time. Another important area of investment was MELI’s credit cards,  the company issued 5.9 million new cards in 2024 as MELI’s total credit portfolio grew 74% year-over-year.  Overall, management stated MELI will continue investing in its platform to capture these opportunities even if sometimes these lon-term investments put short term pressure on margins.

MercadoLibre is the largest online commerce platform in Latin America and gives users a portfolio of services to do commercial transactions. The company is like South America’s combination of eBay, PayPal, and Shopify rolled into one. Here’s a quick rundown of the company’s history:

  • 1990’s: MercadoLibre’s founder went to college at Stanford where he made relationships to gather funding for this new endeavor which was to be the eBay of South America.
  • 1999: MerdadoLibre launched in Argentina (where Internet usage there was low at the time).
  • 2001: eBay took a 20% stake in MercadoLibre and the two companies and developed a working relationship.
  • 2003: MELI launched its FinTech division Mercado Pago. an online payment platform that facilitates transactions on and off the marketplace.
  • 2007: MELI had its IPO.
  • 2013: launched Merado Enviios logistic service.
  • 2016: eBay sold all its shares of MELI.
  • 2017: launched Mercado Credito, a credit solution for online merchants and consumers.

Here are some business highlights from last qtr:

  • Commerce — Mercado Libre: 
    • Revenue grew 51% year-over-year (YOY) in US dollars.
    • 59% of total company revenue.
    • Items sold grew 27% year-over-year.
    • Unique active buyers grew 24% year-over-year.
  • FinTech — Mercado Pago & Mercado Credito:
    • Revenue grew 25% in US dollars.
    • 41% of total company revenue.
    • FinTech services Total Payment Volume (TPV) grew 34% YOY.
    • FinTech Monthly Active Users grew by 34% to 61.2 million.
    • Assets Under Management grew 129% YOY to $10.6 Billion.
    • Credit Portfolio grew 74% to $6.5 billion US dollars.
      • Merchant Portfolio grew 58%
      • Consumer Portfolio grew 45%
      • Credit Card Portfolio grew 118%

MELI’s numbers are exceptional, especially profit estimates for the years ahead. Analysts give the company an Estimated Long-Term Growth Rate of 30%. This company looks a lot like Amazon did when its profits began rolling in. Analysts estimate MELI’s profits to grow from $20 a share in 2023 to maybe $139 in 2029. A 45 P/E on $139 in profits would get this stock from around $2000 to maybe $6000. MELI is a top holding in the Aggressive Growth Portfolio and Growth Portfolio.
One Year Chart
MELI stock hit an All-Time high the day after the company reported last qrt’s earnings. Alas, the stock succomed to selloing presure the very next day. MELI’s now slipped back into its old trading range. 

The Est. LTG is 30%, down from 38% 2QtrsAgo. That’s fine, but I think profits can grow faster than that.

P/E is 41, up from 38 2QtrsAgo. I think the stock is a good value here.

Quarterly profit growth is often erratic. We have to accept this. It’s been that way for years.
Earnings Table
Last qtr, MercadoLibre reported 288% profit growth, beating the analyst’s expectation of 157% growth. Revenue increased 37%, year-over-year in US dollars against analyst estimates of 33%. Gross Profit Margin (excluding Argentina) was 45.4% vs. 46.5% a year ago due to investments in logistics. Operating Margin was 13.5%, up from 7.6% a year-ago.

  • Gross Merchandise Value (GMV) increased 8% year-over-year.
  • Total TPV increased 33% year-over-year.

Here’s geographic revenue growth from last qtr:

  • Brazil: +38% revenue growth yoy, 52% of total company revenue.
  • Mexico: +43% revenue growth yoy, 22% of total company revenue.
  • Argentina: +31% revenue growth yoy, 22% of total company revenue.
  • Others: +40% revenue growth yoy, 4% of total company revenue.

Annual Profit Estimates look amazing:

2025: $47.42
2026: $63.35
2027: $86.05
2028: $117.15
2029: $138.86

Qtrly Profit Estimates are for 26%, 8%, 53%, and 22% profit growth the next 4 qtrs. Analysts think MELI revenue will grow 28% next quarter.
Fair Value
I’m pricing MELI on a price-to-sales basis as profits are low right now. Looking back to past years (2014-2024), MELI’s year-end price-to-sales ratio was: 10, 8, 8, 11, 9, 12, 21, 9, 4, 5, and most recently 4.

This qtr, the stock sells for 4x 2025 revenue estimates, my Fair Value is 5x 2025 revenue:

Current:
4 x $25.9 billion revenue est = $99 billion market cap
$99 billion / 51 million shares = $1945

2025 Fair Value:
5 x $25.9 billion revenue est = $129 billion market cap
$129 billion / 51 million shares = $2550
Upside/Downside: +31%

2026 Fair Value:
5 x $32.0 billion revenue est = $160 billion market cap
$160 billion / 51 million shares = $3157
Upside/Downside: +62%
Bottom Line
MercadoLibre (MELI) has been a wild stock the past five years. Overall this has been an excellent investment as MELI went public in 2007 and opened at $22 a share.

MercadoLibre has solid momentum in its business lines. But investors aren’t enamoured with the stock. I think the stock is coiled up and could make a run higher when the stock market turns up.

MELI ranks 2nd in the Growth Portfolio and Aggressive Growth Portfolio Power Rankings.
Power Rankings
Growth Stock Portfolio

2 of 29

Aggressive Growth Portfolio

2 of 13

Conservative Stock Portfolio

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