Jonah Lupton
CEO & CIO of FirstWave Capital, Long-Biased Growth
MercadoLibre and Sea are building massive e-commerce and fintech businesses with accelerating growth that the market is ignoring while it focuses on AI infrastructure. MercadoLibre grew revenue 50% and Sea 48% year over year, with acceleration for four and five straight quarters respectively. Valuations remain compelling at 20x and 15x forward EBITDA, leaving room for multiple expansion if margins improve over the next couple of years. x.comÂ
Sea, MercadoLibre and Coupang are being overly punished for heavier capex years that should set them up for better growth and margins later. The open question is whether elevated capex carries into next year too, and it probably will, because competition is only getting tougher for all three. @GabGrowth, in the post this replies to, calls Sea the cheapest it has been since $40, at about 26x trailing earnings after 36% revenue growth in 2025. x.comÂ
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 seems cheap at roughly 3x enterprise value to sales given revenue is up about 700% while its stock price is back at 2020 levels. It is hard to see how the multiple can keep compressing. 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'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
Sea Limited's strong execution and regained management trust make the beaten-down stock a buy here. After a rough two years following Covid, it faces less competition in its home markets than Amazon or MercadoLibre face in theirs, yet its stock trades very low. Existing holders should be loading up or question their conviction; long-term margins remain uncertain for both Sea and MercadoLibre. 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
Sea Limited's cash generation and sales have risen sharply while its share price is back at its 2020 level. Annual free cash flow moved from negative $100 million to $4.5 billion and revenue from $2.6 billion to $22.9 billion; at $74 versus a Street consensus target above $150, it is a strong buy and undervalued. x.com x.comÂ
MercadoLibre is compounding faster than the market gives it credit for, trading at 30x forward earnings with 37% estimated 2027 EPS growth per @DimitryNakhla's list, below its growth rate on a PEG basis. FICO shows the same at 25x with 27% growth, part of a quality discount broader than most people realize. x.comÂ
MercadoLibre can tread water for a long time because it constantly has to spend to defend its revenue base. It is a very capital-intensive business trading at more than 40x forward earnings, leaving it vulnerable if revenue ever slows. x.comÂ
MercadoLibre is cheap for a company with an unmatched growth record: 28 straight quarters of 30%+ revenue growth, something no other company has achieved. Yet the stock is almost flat over five years, trading at 29x forward earnings and 2.4x EV/sales. x.comÂ
