TacticzHazel
Energy-Market Analyst, Long-Term Fundamental Investing
Overlooked emerging-market growth names in Latin America and Southeast Asia, such as Sea, Coupang, Nu, Grab and MercadoLibre, should rerate once the semis and AI-buildout run cracks. That run is unsustainable: hyperscaler capex should slow, with recent increases driven by memory costs rather than demand; circular financing is spreading; and OpenAI's roughly $1T and Anthropic's $330B of commitments depend on them delivering amid profitability doubts. EM growth is there but has had little love. x.com x.comÂ
MercadoLibre and Nu Holdings have massive runways and have thrived across political backdrops, so they do not need tax cuts or deregulation to keep winning. Both have performed extremely well in Brazil under Lula since 2023, even in a fragile macro backdrop. The election-driven selloff left these cream-of-the-crop businesses at lower multiples, and more near-term selloffs are possible. 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
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
Political fear after Lula election wins is a buying opportunity in Brazilian stocks, including EWZ, MercadoLibre and Nu Holdings. In USD, the table shows 12-month gains of 115% after 2002, 76% after 2006 and 18.5% after 2022, though shorter-term returns varied. 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
Brazil's political developments have driven a selloff that makes MercadoLibre a dip opportunity. MELI is down 11% amid the market's reaction. x.comÂ
MercadoLibre, dLocal and Nu Holdings' growth under Lula and a right-dominated Congress make their election-driven selloff look temporary. His reelection is not ideal, but they grew substantially during his previous four years in office, and Congress could make his agenda difficult to pass. x.comÂ
Crowded Brazil and EWZ longs are exposed after Lula's surprise election win, as reported by negligible_cap. MercadoLibre and many others are going to get absolutely nuked tomorrow. x.comÂ
The election news is more bark than bite for Nu Holdings, MercadoLibre, StoneCo and PagSeguro. Funds and institutions seem to have been caught off guard and need to unwind positioning; the four should recover nicely over the next few weeks or months. x.comÂ