Just a Dude Who Invests
Retail Investor, Economics & Technology Commentary
MercadoLibre's commerce and fintech revenue growth underpins the view that its shares are undervalued at current prices. The attached chart shows quarterly commerce services revenue reaching $4.3 billion and fintech revenue $4.4 billion in June 2026, up from $769 million and $467 million in March 2021. x.comÂ
MercadoLibre's growth under Lula makes today's selloff look absurd. On a TTM basis since Q1 2023, revenue is up 206% and EPS 200%; having done so well during his term, it should be fine going forward. x.com x.comÂ
Political uncertainty and Amazon competition have held MercadoLibre's stock back despite a humming business. The company is great and the stock deserves to turn, but at roughly 45 times earnings and only about 12% gained over five years, it has remained a difficult stock to own. x.com x.com x.com x.comÂ
Latin American equities' sell-off looks overdone as long as the underlying businesses keep growing and fundamentals remain intact. Under that condition, the drop is market noise, and MercadoLibre and Nu Holdings could offer attractive opportunities amid the panic. x.comÂ
MercadoLibre has reaccelerated as it scaled, a rare combination of scale and growth. Quarterly revenue has climbed from $474M in 2019 to over $10B, a 21x increase, yet it is still growing around 49%. x.com x.comÂ
MercadoLibre's collapsing margins and earnings make its 45-times-earnings valuation look like a value trap. It faces intense competition, and less of its revenue reaches the bottom line; falling earnings make the stock more expensive even as its price falls. Nu Holdings trades at 17 times earnings and Inter & Co at 7 times, with both growing revenue and earnings robustly. Selling MercadoLibre to build positions in companies with better fundamentals is under consideration. x.com x.com x.com x.comÂ
MercadoLibre is a strong business worth owning long term, and its valuation has compressed even as earnings soared. Per a Blossom post, over five years revenue grew from $5.52 billion to $31.8 billion and EPS from -$0.03 to $37.88, while the price-to-sales ratio fell from 17.2x to 2.67x and the share price barely moved. x.comÂ
MercadoLibre's share price should eventually catch up with its profits, because for a compounder the gap always closes, just rarely on an investor's timeline. Since 2002 the stock is up 6,414% while net income is up 79,980%, so profits grew about 12 times faster than the price. x.comÂ
South American political unpredictability keeps investors from rewarding MercadoLibre's excellent fundamentals. Today's selloff illustrates that risk, despite the strength of the business. x.com x.comÂ
MercadoLibre is a one-of-a-kind compounder that the market is wrongly punishing for reinvesting its profits. It has grown revenue more than 30% for 30 quarters in a row, which no company has ever done, and growth is accelerating, now around 50% year on year. x.comÂ