How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.
Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.
What if you'd invested in MercadoLibre (MELI) ten years ago? It may not have been easy to hold on to MELI for all that time, but if you did, how much would your investment be worth today?
MercadoLibre's Business In-Depth
With that in mind, let's take a look at MercadoLibre's main business drivers.
Buenos Aires, Argentina based MercadoLibre, Inc. is one of the largest e-commerce platforms in Latin America. The company is a market leader in e-commerce in Brazil, Argentina, Colombia, Chile, Ecuador, Costa Rica, Peru, Mexico, Venezuela and Uruguay based on unique visitors and page views.
The company also operates e-commerce platform in Honduras, Nicaragua, Dominican Republic, Salvador, Panama, Guatemala, Paraguay, Bolivia, and Portugal.
MercadoLibre reported revenues of $3.97 billion in 2020. The company offers a bunch of six integrated e-commerce services:
MercadoLibre Marketplace enables businesses and individuals to conduct sales, purchase online and list their merchandise.
MercadoLibre Classifieds offers online classified listing services for motor vehicles, real estate and services. These listing charge only optional placement fees and hence they are different from Marketplace listings.
MercadoPago FinTech platform allows users to send and receive payments seamlessly within MercadoLibre’s marketplace. Outside of this, merchants are allowed to process payments via websites, mobile apps and mobile point of sale.
MercadoLibre advertising program enables advertisers and seller to display their product ads on the company’s webpages.
MercadoShops online webstores solution aids users in managing and promoting their online stores.
MercadoEnvios logistics service provides integration with third-party carriers and logistics service providers to the sellers on the company’s platform.
MercadoLibre has four reportable geographic segments— Brazil, Argentina, Mexico and Other Countries. In 2020, Brazil generated 55.2% of the company’s revenues. Argentina, Mexico and Other Countries generated 24.7%, 14.5% and 5.6% of revenues, respectively.
Effective Dec 1, 2017, MercadoLibre deconsolidated its Venezuelan subsidiaries. The company no longer includes the balances, results of operations and cash flows of the Venezuelan subsidiaries in its consolidated financial statements.
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in MercadoLibre a decade ago, you're probably feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in July 2011 would be worth $20,601.94, or a gain of 1,960.19%, as of July 29, 2021, and this return excludes dividends but includes price increases.
In comparison, the S&P 500 gained 238.34% and the price of gold went up 6.95% over the same time frame.
Analysts are forecasting more upside for MELI too.
MercadoLibre is benefiting from strengthening online-to-offline offerings. Further, robust mobile-point-of-sale business and growing adoption of MercadoPago are contributing well to the total payment volume growth of the company. Additionally, rapid adoption of Mobile Wallet remains a major tailwind. Further, solid momentum across free shipment program is leading to robust shipments growth via MercadoEnvios. The company remains optimistic about its FinTech and logistics businesses. Notably, the stock has outperformed the industry it belongs to on a year-to-date basis. However, rising expenses related to warehousing, free shipping subsidies and mPOS discounts are impacting margins. Further, mounting marketing spending remains a major negative. Also, intensifying e-commerce competition remains a risk for the company’s market position.
The stock has jumped 5.09% over the past four weeks. Additionally, no earnings estimate has gone lower in the past two months, compared to 2 higher, for fiscal 2021; the consensus estimate has moved up as well.
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MercadoLibre, Inc. (MELI) : Free Stock Analysis Report
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