MercadoLibre (MELI): Strong Growth at an Increasingly Attractive Valuation
MercadoLibre (MELI) continues to put up impressive growth numbers across its e-commerce and fintech businesses, even as heavy investment weighs on near-term profitability. We think that combination has created an attractive entry point for investors willing to look beyond the next few quarters.
The stock trades around $1,949 per share, roughly 26% below its 52-week high. Yet the underlying business continues to expand rapidly. MercadoLibre has now delivered at least 30% growth for 30 consecutive quarters. In August, quarterly revenue topped $10 billion for the first time, and revenue is currently growing around 50%.
The concern is profitability. Operating margin recently fell to 6.7% from 12.2% a year earlier, while profit declined for a third consecutive quarter. But much of that pressure comes from investments designed to strengthen MercadoLibre’s position across Latin America. The company is spending on faster and free shipping in Brazil, logistics and credit infrastructure, the Mercado Pago credit card, cross-border trade and customer acquisition in Mexico.
There’s also an important accounting factor behind the lower margins. MercadoLibre’s credit portfolio is growing 87% year over year, and the company must recognize the full expected credit loss when a new loan is issued, while revenue from that loan arrives over subsequent quarters. Roughly two-thirds of the recent margin compression can be traced to this dynamic.
That makes credit quality the key risk we’ll be watching. If losses remain manageable, however, the rapid expansion of MercadoLibre’s lending business could become an increasingly valuable part of its broader ecosystem.
MercadoLibre’s different businesses also reinforce one another. Its marketplace provides transaction data that can help with credit underwriting. Mercado Pago gives consumers access to payments and credit, which can increase purchasing activity. Mercado Envios strengthens the marketplace through warehousing, shipping and last-mile delivery. The company has already grown to roughly 84 million active buyers and 82 million fintech users.
Meanwhile, the valuation has become considerably more attractive. MercadoLibre’s forward enterprise-value-to-revenue ratio has fallen from 3.8 in March 2025 to 2.1 today, while its enterprise-value-to-EBITDA multiple has declined from roughly 23.7 to 21.4.
We think that’s an appealing setup for a company still growing revenue around 50%. MercadoLibre is investing aggressively in logistics, credit and customer growth while building an ecosystem that becomes more valuable as each piece expands. As long as credit quality remains healthy, we believe today’s spending can support substantially greater earnings power over time.
With shares about 26% below their 52-week high and valuation multiples well below where they stood 18 months ago, we see the recent weakness as an opportunity to buy MercadoLibre while its underlying businesses continue to grow at an exceptional pace.
