Mercadolibre (MELI) AI Stock Analysis

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Mercadolibre

(NASDAQ:MELI)

74Outperform

Mercadolibre's overall stock score reflects its robust financial performance and positive outlook from the earnings call, despite technical indicators showing a bearish trend. The company's high P/E ratio suggests a premium valuation, which may limit upside potential. However, its strategic growth in e-commerce and fintech, alongside strong cash flow management, supports a favorable long-term perspective.

Positive Factors

Financial Performance

A strong fourth-quarter result for MercadoLibre has prompted analysts to increase estimates for margins and earnings.

Investment Strategy

MELI's investment approach, including logistics capabilities and Commerce/Fintech platform enhancements, supports continued share gain despite industry competition.

Market Position

MercadoLibre is well-positioned in the Latin American e-commerce and fintech sectors, benefiting from underpenetrated markets and growth potential in advertising and consumer banking.

Negative Factors

Foreign Exchange Impact

The average currency basket for MELI weakened, resulting in a foreign exchange translation drag.

Interest Rate and Currency Headwinds

Brazil interest rates are increasing and the currency has depreciated; FX translation is a drag.

Valuation Concerns

The current valuation of MercadoLibre is considered rich, with a 49x P/E ratio, which reflects its current value, leading to a neutral rating.

Mercadolibre (MELI) vs. S&P 500 (SPY)

Market Cap

$93.35B

Dividend YieldN/A

Average Volume (3M)492.66K

Price to Earnings (P/E)48.8

Beta (1Y)1.06

Revenue Growth43.56%

EPS Growth91.72%

CountryUS

Employees84,207

SectorConsumer Cyclical

Sector Strength63

IndustrySpecialty Retail

Share Statistics

EPS (TTM)37.69

Shares Outstanding50,697,376

10 Day Avg. Volume521,030

30 Day Avg. Volume492,663

Financial Highlights & Ratios

PEG Ratio0.53

Price to Book (P/B)N/A

Price to Sales (P/S)5.11

Price to Cash Flow (P/CF)9.10

P/FCF Ratio10.10

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$2,620.83

Price Target Upside42.34% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering13

Mercadolibre Business Overview & Revenue Model

Company DescriptionMercadoLibre, Inc. (MELI) is a leading e-commerce and technology company operating in Latin America, with a primary focus on providing a robust online marketplace that connects millions of buyers and sellers across the region. The company offers a wide range of products across various categories, including electronics, apparel, home goods, and more. In addition to its marketplace, MercadoLibre provides complementary services such as Mercado Pago (payment solutions), Mercado Envios (logistics solutions), and Mercado Credito (credit solutions), enhancing the overall user experience and facilitating seamless transactions.

How the Company Makes MoneyMercadoLibre generates revenue through multiple streams, primarily from its e-commerce platform. The company earns from transaction fees charged to sellers for each sale made on its marketplace. Additionally, its payment solution, Mercado Pago, contributes significantly to revenue by charging fees for processing payments both on and off its platform. The logistics arm, Mercado Envios, adds to the revenue by offering shipping solutions that attract fees from sellers opting for their services. Another growing revenue stream is Mercado Credito, which provides loans to both buyers and sellers, earning interest income. Partnerships with local and international businesses also play a role in expanding MercadoLibre's service offerings and revenue potential.

Mercadolibre Financial Statement Overview

Summary

Mercadolibre showcases strong financial performance with robust revenue growth and profitability, moderate leverage, and effective cash management. The company's strong growth trajectory is supported by its impressive net profit margin and healthy cash flow generation.

Income Statement

Very Positive

Mercadolibre has shown strong revenue growth with a significant increase from $14.47 billion in 2023 to $18.64 billion in 2024. The gross profit margin is robust at 51.36%, and the net profit margin has improved to 10.25%. Both EBIT and EBITDA margins are healthy, indicating efficient operational performance. Overall, the company is demonstrating strong growth and profitability trends.

Balance Sheet

Positive

The balance sheet reflects a good equity position with a debt-to-equity ratio of 0.26, indicating moderate leverage. The return on equity (ROE) is impressive at 43.92%, highlighting strong profitability relative to equity. The equity ratio stands at 17.27%, suggesting a stable financial structure, although room for improvement exists in terms of increasing equity relative to total assets.

Cash Flow

Very Positive

Mercadolibre's cash flow is strong, with free cash flow showing significant growth. The operating cash flow to net income ratio is favorable at 4.14, indicating efficient cash generation relative to net income. The free cash flow to net income ratio complements this at 4.14, underscoring healthy cash management practices. The company is effectively converting its income into cash, supporting its growth trajectory.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
20.78B	14.47B	10.54B	7.07B	3.97B
	Gross Profit
9.58B	7.21B	5.16B	3.01B	1.71B
	EBIT
2.63B	1.82B	1.03B	440.70M	230.46M
	EBITDA
3.25B	2.29B	1.36B	614.28M	269.30M
	Net Income Common Stockholders
1.91B	987.00M	482.00M	83.00M	-707.00K
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
9.18B	7.33B	3.03B	2.79B	2.46B
	Total Assets
25.20B	17.65B	13.74B	10.10B	6.53B
	Total Debt
6.85B	5.33B	5.41B	3.98B	1.71B
	Net Debt
4.21B	2.78B	3.50B	1.40B	-148.28M
	Total Liabilities
20.84B	14.57B	11.91B	8.57B	4.87B
	Stockholders Equity
4.35B	3.07B	1.83B	1.53B	1.65B
Cash Flow		Free Cash Flow
7.06B	4.63B	2.48B	355.55M	935.41M
	Operating Cash Flow
7.92B	5.14B	2.94B	965.04M	1.18B
	Investing Cash Flow
-8.29B	-3.45B	-3.87B	-1.60B	-252.18M
	Financing Cash Flow
1.96B	-267.00M	916.00M	1.93B	242.27M

Mercadolibre Technical Analysis

Technical Analysis Sentiment

Negative

Last Price1841.29

Price Trends

50DMA

2031.57

Negative

100DMA

1943.87

Negative

200DMA

1924.03

Negative

Market Momentum

MACD

-6.73

Positive

RSI

39.89

Neutral

STOCH

14.66

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MELI, the sentiment is Negative. The current price of 1841.29 is below the 20-day moving average (MA) of 2021.00, below the 50-day MA of 2031.57, and below the 200-day MA of 1924.03, indicating a bearish trend. The MACD of -6.73 indicates Positive momentum. The RSI at 39.89 is Neutral, neither overbought nor oversold. The STOCH value of 14.66 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MELI.

Mercadolibre Risk Analysis

Mercadolibre disclosed 42 risk factors in its most recent earnings report. Mercadolibre reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Mercadolibre Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BABA	83 Outperform	$303.80B	16.39	11.97%	0.84%	4.28%	28.42%
SE	78 Outperform	$61.24B	142.71	5.93%	―	28.46%	185.04%
MELI	74 Outperform	$93.35B	48.85	51.50%	―	43.56%	91.72%
EBAY	73 Outperform	$29.08B	15.83	34.29%	1.76%	2.79%	-23.30%
ETSY	63 Neutral	$4.76B	18.73	-39.97%	―	2.18%	5.77%
CPNG	59 Neutral	$36.22B	241.98	3.76%	―	24.14%	-88.77%
Sector *	59 Neutral	$11.20B	10.09	-1.41%	3.96%	1.31%	-16.95%

* Consumer Cyclical Sector Average

Performance Comparison

MELI

Mercadolibre

1,841.29

352.71

23.69%

EBAY

eBay

62.40

11.76

23.22%

BABA

Alibaba

116.54

46.34

66.01%

ETSY

Etsy

44.42

-21.68

-32.80%

Sea

106.63

50.65

90.48%

CPNG

Coupang

20.06

1.63

8.84%

Mercadolibre Earnings Call Summary

Earnings Call Date: Feb 20, 2025 | % Change Since: -11.30% | Next Earnings Date: May 8, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong performance by MercadoLibre with substantial revenue growth and user expansion. While there are concerns related to credit risks in Brazil and macroeconomic factors in Argentina, the overall outlook remains optimistic with continued investments in logistics, user experience, and financial services.

Highlights

Record Revenue and Free Cash Flow

MercadoLibre achieved $21 billion in revenue and over $1 billion in free cash flow in 2024, demonstrating their ability to drive profitable growth while investing in long-term strategic objectives.

Significant Growth in Unique Buyers and Active Users

The platform surpassed 100 million unique buyers and 60 million monthly active users, reflecting trust and loyalty in MercadoLibre's ecosystem.

Expansion of Logistics Infrastructure

Investments in logistics led to record-breaking numbers of new buyers and improvements in logistics efficiency, with a 29% year-on-year increase in items shipped.

Credit Card Portfolio Growth

MercadoLibre issued 5.9 million new credit cards in 2024 and more than doubled its portfolio, positioning itself to become the largest digital bank in Latin America.

Innovation in User Experience

Developments such as virtual try-ons for makeup and standardized filters in fashion improved the purchasing experience.

Advertising Revenue Growth

There was a 50 basis point increase in advertising revenue as a percentage of GMV, driven by strengthening relationships with brands and agencies.

Lowlights

Cautious Approach to Credit in Brazil

Due to a rising interest rate environment, MercadoLibre reduced the issuance of micro cards and tightened payback periods to manage risk.

Margin Volatility in Brazil

Contribution margin in Brazil was down slightly year-over-year, partially due to higher provisions for the credit card build-out.

Economic and Regulatory Challenges in Argentina

Despite strong growth, MercadoLibre remains cautious about the macroeconomic volatility and regulatory environment in Argentina.

Company Guidance

In the recent earnings call, MercadoLibre reported robust financial performance for the fiscal year 2024, with significant growth in several key metrics. The company achieved a revenue of $21 billion and generated over $1 billion in free cash flow, demonstrating their ability to drive profitable growth while maintaining strategic investments. Notably, MercadoLibre surpassed 100 million unique buyers in its marketplace and 60 million monthly active users on its fintech platform for the first time. The company issued 5.9 million new credit cards, doubling its portfolio, and saw a 74% year-on-year acceleration in its credit portfolio. Additionally, the logistics operations reached record productivity levels with a 29% year-on-year increase in items shipped, while cost per package either declined or rose below inflation across major geographies. MercadoLibre's strategic focus remains on enhancing its e-commerce and fintech offerings, leveraging the relatively low penetration of e-commerce in Latin America and the growing demand for better financial products.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.