MELI
🚀 Mercado Libre is experiencing explosive growth across its e-commerce and fintech segments, with revenues up 37% in USD and Total Payment Volume up 72% in constant currency, showcasing strong market penetration in Latin America.
📈 Despite a demanding valuation with a Price-to-Earnings ratio of 50-55, the company holds only 5% of Latin America’s retail market share, indicating a vast runway for future expansion and sustained high growth rates.
🌍 Currency fluctuations in emerging markets present both risks and opportunities, but recent U.S. dollar weakness could further boost Mercado Libre’s already impressive financial results, highlighting the strategic potential of its regional focus.
@invertirdesdecasa:
“Mercado Libre recently presented another spectacular earnings report, demonstrating resilience amidst economic uncertainties. The stock closed at $2,450 on May 9th, reflecting nearly 39% growth year-to-date, with a market capitalization around $125 billion. Key business highlights include a Gross Merchandise Volume of $13.3 billion, up 40% in constant currency, and a Total Payment Volume of $58.3 billion, a staggering 72% increase in constant currency. The credit portfolio also expanded significantly to nearly $8 billion. Quarterly revenues reached $5.9 billion, a 37% rise in US dollars, while income from operations was $763 million with a strong 13% margin. Net income neared $500 million. Operationally, profit growth outpaced revenue growth, indicating improved margins, partly driven by a strong performance in Argentina, which effectively ‘saved the quarter’ despite currency devaluations impacting dollar-reported figures. However, April saw a favorable shift with emerging market currencies appreciating against the dollar. The company’s net debt increased by about $700 million, primarily to fund its growing credit operations in Brazil, but this is considered manageable given its robust cash generation. Assets Under Management in its fintech arm doubled year-over-year to $11.2 billion. While non-performing loans saw a slight uptick to 8.2% in the last quarter, they remain well-provisioned and are lower year-over-year. Valuation-wise, Mercado Libre trades at a demanding 50-55 times estimated current year earnings. While this is not a bargain, it’s also not considered a bubble, given its historical compounded annual growth rate near 50%. The company currently holds only 5% of Latin America’s retail market share, and the region’s e-commerce penetration is just 17%, suggesting a vast runway for future growth. The analysis emphasizes that ‘the best is yet to come.’ The overall conclusion suggests that while the valuation is exacting, the growth potential is immense. The recent weakening of the US dollar could further benefit results, and investing in emerging markets like those Mercado Libre serves is viewed as a strategic move for diversification and capturing higher growth.”
Watch the exact part of the video where @invertirdesdecasa talks about Mercado Libre here:
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Read more articles by the world’s top 100 analysts on Mercado Libre (MELI) at the following link. MELI stock.
