MercadoLibre, Inc. (NASDAQ: MELI)
MercadoLibre, Inc. is an Argentine company headquartered in Montevideo, Uruguay, and incorporated in the United States, that operates online marketplaces dedicated to e-commerce and online auctions, including mercadolibre.com. MercadoLibre is Latin America's leading e-commerce platform, as well as an emerging force to be reckoned with in fintech and payments. Additionally, the company's small size potentially sets the stage for more impressive returns. With this set of impressive credentials, the company has seen an increase in mentions by 93% over the last day, encouraging investors to wonder if it's the right time to take a position in the company. Currently, shares of MercadoLibre trade at a whopping $890 per share.
There are lots of foreign companies that are worth investing in, and this one might be one of the best at the moment. Here are some reasons you might want to invest in MercadoLibre now.
In the second quarter of 2022, its commerce-related revenue increased by 22%. MercadoLibre's logistics and lending operations continue to gain momentum as well.
Although it’s primarily an e-commerce company, it has recently been making its largest gains in other sectors. That did not compare to the fintech segment, which increased its total payment volume by 72% over the same time frame to $30 billion.
Another metric on this list, the total payment volume on the Mercado Pago payments platform is now more than $120 billion annualized also speaks to the success of the company’s fintech operations.
Through primarily e-commerce and fintech, net revenue for the first six months of 2022 came in at $4.8 billion, 57% higher than in the same period the year before. This included a 43% rise in the cost of net revenue and an 81% increase in operating expenses.
Last quarter, MercadoLibre managed to grow revenue by roughly 56.5% year over year on a currency-adjusted basis, and its gross profit margin expanded to 49.4% which was up from 44.3% in the prior-year period.
Apart from this, the $188 million in net income for the first half of the year came in much higher than the $34 million in income during the first two quarters of 2021.
The company also increased total payment volume by 84% and gross merchandise volume on the platform by 26% while growing net income, all despite current macroeconomic headwinds.
Analysts forecast 47% revenue growth this year and 28% in 2023, representing robust growth for the company.
Not only has the company done well recently, but it also has a history of doing well, making it relatively reliable. Over the past decade, it has delivered over 1,100% in total returns, more than 3X the S&P 500 over the same period.
Although MercadoLibre seems like a solid company to invest in right now, there are factors working against its potential growth. Here is one of them.
Despite the strong business performance, MercadoLibre stock has gotten hammered amid the pullback for growth stocks this year and macroeconomic headwinds impacting key geographic segments for the company, including Argentina and Brazil.
Despite any headwinds, this is still a high-potential growth story. Still, the approximate 50% drop in the stock price from the 52-week high should help compensate for the slowing revenue growth. If you're willing to embrace some near-term volatility, I think MercadoLibre looks like a great buy right now.
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