MERCADOLIBRE (MELI:NASDAQ) $2,507.83

Gain to date: 64%

Shares in Wall Street-listed MercadoLibre (MELI:NASDAQ) have been riding high on its dominant presence in Latin America and a diversified business model across ecommerce and fintech.

Year-to-date, the stock is up 42%, insulated largely from US tariffs chaos, and aided by robust earnings over the past couple of quarters, far outstripping the Nasdaq Composite’s negative return in 2025.

Since our original Great Idea pitch in early April 2024, the stock has rallied 64%, again beating the Nasdaq’s rough 15% gain.

WHAT HAS HAPPENED SINCE WE SAID TO BUY?

Uruguay-based MercadoLibre has most recently been expanding its advertising reach with the launch of the Mercado Play app on smart TVs across Latin America. The app, now available for download on over 70 million smart TVs, offers users access to more than 15,000 hours of free content.

With fewer than half of the region’s population subscribed to paid streaming services, MercadoLibre sees this as a significant opportunity to engage new audiences. The initiative is positioned as a triple-win, benefiting consumers through free content, content studios through broader distribution, and Mercado Ads through enhanced ad inventory and reach.

Total revenue in the first quarter of 2025 (reported in early May) were driven by accelerating commerce and fintech revenues, which grew 32.3% and 43.3% year-on-year, respectively. The marketplace’s Unique Active Buyers grew 25% and fintech’s Monthly Active Users rose 31%.

Yet challenges remain: credit risk, where margins declined in Q1, and competition the most obvious elephants in the room, with Amazon (AMZN:NASDAQ) apparently scaling up and Walmart (WMT:NYSE) already Latin America’s biggest bricks and mortar retailer.

WHAT SHOULD INVESTORS DO NOW?

This is a tough call and will largely depend on your own investment horizon and appetite for risk. Over the longer term, this still looks like an attractive growth investment, a company well positioned to capitalise on a sizeable ecommerce and digital finance opportunity across the region.

Analysts still estimate earnings and revenue growth of 30%-odd over the next couple of years, while margins could also see improvement.

That may justify a 12-month rolling PE (price to earnings) multiple of 44 in the eyes of some investors, but to others that valuation may look stretched, especially given average price target consensus sees less than 10% further upside.

In short, we see nothing wrong with sticking with your investment if it suits your goals and timeframe. On the other hand, 60%-plus gains are not to be sniffed at, and more cautious investors may want to lock-in these excellent returns and redeploy funds elsewhere. Take profits. 

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