In this segment of the Motley Fool Money radio show, host Chris Hill, Million Dollar Portfolio's Jason Moser and Matt Argersinger, and Total Income's Ron Gross reflect on another great quarter for the top e-commerce company in Latin America, MercadoLibre (MELI +3.74%).
The investments in the company that had markets fearing for its margins are clearly paying off now, and the stock's rise Friday rewarded the believers. The real question remains, of course, whether Amazon.com (AMZN +1.96%) could successfully invade its territories. And the Fools have an answer.
A full transcript follows the video.
This video was recorded on Nov. 3, 2017.
Chris Hill: Third quarter revenue for MercadoLibre rose 60%, much higher than analysts were expecting. Shares of the Latin American e-commerce giant up more than 10% on Friday. Matty, those fears of Amazon moving into Brazil, we can put those aside, at least for one day.
Matt Argersinger: I think you can put those aside, maybe for a little while now. As you mentioned, the Amazon threat, and shares sold off after second-quarter results because they missed earnings expectations, they ramped up their spending in free shipping initiatives, which hurt margins. But after this quarter, I'd say, you can bet those investments are starting to pay off. Units sold, which is what I use as a proxy for currency neutral revenue growth, accelerated for the second consecutive quarter, growing 56% year-over-year. Unique buyers climbed 31% to 16.3 million. They added 10 million customers, now over 200 million registered users. Payment transactions were higher. If you had any thoughts that Amazon was going to be a big competitive threat, and it certainly is, but just look at the Mexico segment for MercadoLibre. Amazon came into Mexico about two years ago. In Mexico, their units sold there have accelerated for eight consecutive quarters, unique buyers are up 67%, and the purchase frequency among those buyers has nearly doubled over those two years. So, if investors are worried about Amazon coming to Brazil, look at Mexico. Mercado Libre's business in Mexico is as strong as it's ever been. I expect that to play out in Brazil as well. Even if Amazon becomes a big market share leader in the Latin America, undoubtedly they will, I feel like MercadoLibre is still going to be a big player.
