Compared to other tech names, MELI stock has always felt a little different. It embodies the vitality of developing markets, which are loud, rapidly expanding, and sometimes chaotic. It has also been humbled recently. Despite reporting a 45% increase in revenue for the fourth quarter, shares are down about 33% from their 52-week high, trading at about $1,750.
That discrepancy appears to be confusing at first glance.
MercadoLibre, Inc., the company that runs the ticker, recently reported net revenue of $8.76 billion for the quarter, with a roughly 35% increase in gross merchandise volume in Brazil and Mexico. The sales of goods increased by 45% in Brazil alone. The majority of retailers would frame and display those figures on a wall. Nevertheless, the stock fell.
| Company Name | MercadoLibre, Inc. |
|---|---|
| Stock Ticker | MELI (NASDAQ) |
| Founded | 1999 |
| Headquarters | Montevideo, Uruguay |
| CEO | Ariel Szarfsztejn (since Jan 2026) |
| Employees | 123,670 (2025) |
| Market Cap | ~$89 Billion |
| 52-Week Range | $1,665.00 – $2,645.22 |
| Latest Price | $1,757.58 (Feb 27 Close) |
| P/E Ratio | ~44.6 |
| 2024 Revenue | $20.78 Billion |
| Investor Relations | https://investor.mercadolibre.com |
| Company Website | https://www.mercadolibre.com |
It seems as though investors are obsessed with margins. By purposefully lowering its free-shipping threshold in Brazil, MercadoLibre increased demand while reducing operating margins by roughly five to six percentage points. Put differently, it prioritized scale over immediate financial gain. A few shareholders applauded the goal. Some flinched at the expense.
It’s easy to see where the money is going when you stroll through São Paulo’s expansive distribution centers, which are cavernous warehouses bustling with barcode scanners and conveyor belts. Outside, delivery vans form a line, drivers load last-mile packages, and engines idle in the humid air. The business is developing infrastructure in addition to an app. That requires money.
It’s possible that Wall Street finds that tradeoff difficult because it’s used to hearing about margin expansion.
These days, MercadoLibre is more than just an online store. Its fintech division, Mercado Pago, is growing quickly; at $12.5 billion, its credit portfolio has almost doubled annually. The total value of assets under management has surpassed $19 billion. Mercado Pago has ingrained itself into everyday life in nations where traditional banking can seem aloof or cumbersome. It can be used to pay utility bills, finance small purchases, and transfer money with a few taps.
Opportunities arise from that expansion. It adds risk as well.
In good times, credit growth can be euphoric. However, economic instability has never been absent from Latin America. Political changes, inflation spikes, and currency fluctuations all play a supporting role. Whether MercadoLibre can expand its credit operations indefinitely without experiencing more severe loan losses during a downturn is still unknown.
The management maintains that underwriting models are getting better thanks to artificial intelligence and proprietary e-commerce data. Executives highlight improving net interest margins and decreasing non-performing loan ratios in specific cohorts. Though not entirely persuaded, investors appear cautiously receptive.
Additionally, there is advertising. Ad revenue increased by about 67% thanks to AI-driven technologies that improved campaign optimization and merchant targeting. This remarkable growth indicates that MercadoLibre is making better use of its ecosystem for revenue. However, compared to the marketplace and payments segments, advertising still accounts for a smaller portion of revenue.
It is difficult to overlook how MercadoLibre closely resembles Amazon’s initial strategy of forgoing profits in order to control payments and logistics and become ingrained in daily business. Geographical differences, of course. Digital financial services and online retail are still underrepresented in Latin America. There is a structural tailwind.
So is valuation, though. MELI’s price is about 45 times its earnings. That multiple might seem reasonable to a business that is seeing revenue growth of over 40%. It may feel stretched for a stock that has just dropped 33% and is under margin pressure. That’s where the tension resides.
Some investors contend in online forums that the selloff is an overreaction, citing ecosystem strength and long-term revenue compounding. Others wonder if growth will return to normal sooner than anticipated, particularly if consumer spending declines. There is a sense that both sides may be partially correct as we watch this play out.
This year, Ariel Szarfsztejn became the new CEO, taking over a business that had outgrown its startup story but hadn’t yet reached maturity. Changes in leadership frequently bring about subtle changes in tone, such as a change in the cadence of capital allocation or an increase in operational discipline. What that will mean for shareholders is too soon to tell.
Mexico and Brazil, meanwhile, still dominate the narrative. Mercado Pago terminals are used by small vendors in Mexico City’s open-air marketplaces to take card payments. Late at night, shoppers in Buenos Aires compare shipping times while perusing sales listings. The platform is frequently seamlessly integrated into everyday activities.
Of all the assets, that embedded presence may be the most undervalued.
For the time being, MELI stock exhibits both awe and hesitancy. Investors are impressed by the fintech engine’s size, growth, and expansion. They are hesitant about valuation, margins, and credit exposure. The stock’s decline indicates skepticism rather than desertion.
It’s possible that MercadoLibre is undergoing a purposeful reset, forgoing immediate financial gain in favor of long-term supremacy. The market might also be requesting more concrete evidence that those investments will result in long-term earnings growth.
