MercadoLibre (MELI) is a top e-commerce company focusing on Brazil and other Latin American countries. It is a giant firm that has attained a market cap of over $103 billion and annual sales of more than $14 billion.Â
The company runs the biggest marketplace in the region and has expanded its services to other areas like logistics and fintech, which is now used by over 52 million people, up from 37.9 million in 2023.Â
The fintech solution lets people send, save,and borrow money. Over time, the amount of money in its administration has risen to over $6.61 billion.Â
MercadoLibre is often compared to other popular e-commerce companies like PDD Holdings, Alibaba, Jumia, and Amazon.
Its stock has done well over the years, rising from less than $20 in 2007 to over $2,100 today, meaning that people who invested just $1,000 in 2008 now have over $105,000. MELI stock was trading at $2,100 on Tuesday while its HypeIndex metric rose to 73.
Positive hype
MercadoLibre’s business has grown at a fast pace in the past decade. Most recently, its annual revenue rose from over $2.2 billion in 2019 to over $14.4 billion. This growth happened as its gross merchandise volume (GMV) and commissions rose.
The company’s ecosystem is gaining more users. Its e-commerce business had over 56.6 million users in the last quarter while its fintech division had 52 million. The two were much higher than 47.6 million and 37.9 million in the same period in 2023.
Mercado Pago’s assets under management (AUM) has been in a strong uptrend, rising from $3.5 billion to $6.61 billion in the last quarter.Â
Mercado’s acquiring business also continued doing well in the last quarter, with its total transaction value jumping to over $3.7 billion.
The company has a leading market share in the e-commerce industry in the region, meaning that entrants like Shopee will need help to take market share. Besides, it has invested substantially in logistics.
MercadoLibre, a company that was started in 1999, is still seeing robust growth. In the last quarter, its revenue rose by 42% to over $5 billion while its net income margin continued soaring.Â
MELI could benefit as most Latin American central banks have started cutting interest rates.
The company has positive outa look from Wall Street analysts who believe that the stock will rise to $2,280. Some of the most bullish analysts are from Cantor Fitzgerald, Morgan Stanley, and Bank of America.
Analysts also expect its annual revenue to rise to $20.1 billion and $25 billion in 2024 and 2025.
Negative hype
The most notable negative hype is that MercadoLibre is a highly overvalued company with a forward P/E ratio of 47 and a price-to-book multiple of 29.
The weekly chart shows signs that the stock is about to move into the overbought zone as the Relative Strength Index (RSI) has moved close to the overbought level.
There are concerns that the company’s business will start slowing down as competition from Chinese brands like PDD and Alibaba rise. Sea Limited’s Shopee is also growing its business in the region.
The company could be a victim of geopolitical issues, especially if Donald Trump wins in the next election.
MercadoLibre stock analysis
The weekly chart shows that the MELI stock has continued soaring in the past few months. It has jumped above the key resistance point at $2,025, its previous highest point.Â
MELI’s Relative Strength Index (RSI) has continued rising and is nearing the overbought point. Also, the Average Directional Index (ADX) has continued rising, moving to 31, meaning that it has more momentum.Â
Therefore, the stock will likely continue rising as investors target the next point at $2,250. The next key catalyst to watch will be its financial results on 6th November.
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