What happened

Shares of MercadoLibre (MELI -1.51%) jumped 26% in February after the Argentine e-commerce giant delivered fourth-quarter earnings that exceeded expectations and helped to calm some of the worries that had surrounded the company through much of 2018.

So what

MercadoLibre has been a great longtime performer, with its shares up more than 353% in the last five years. But the stock was down 6.93% in 2018 due to unexpected Brazilian postal rate hikes, a trucker strike, and an accounting rule change that made results appear weaker than under the old standard. The company missed analyst expectations last summer due to that confluence of factors, and investors seemingly took a wait-and-see approach in the months that followed.

Check out the latest earnings call transcript for MercadoLibre.

A hand-drawn stock chart showing growth.

Image source: Getty Images.

The fourth-quarter results provided investors with reason to cheer. MercadoLibre reported net revenue of $428 million, up 20% year over year, and a strong 62% in local currencies. The company lost $0.05 per share, better than the $0.13 expected by analysts, and significantly improved from the $1.53 loss per share in the year-ago quarter.

Adjusting for foreign exchange losses resulting from the weakness of the Argentine peso versus the U.S. dollar, MercadoLibre would have been profitable for the quarter.

Now what

While the company's core marketplace revenue was up, the real standout was its payment growth. Payment transactions increased by 72% year over year to 126 million, resulting in total payment volume of $5.3 billion. Management is feeling confident about the payments business. CEO Pedro Arnt, on a call that followed the results, said that the company's payment arm, MercadoPago, is "a powerful disruptive provider of inclusive financial technology solutions."

MercadoLibre is often referred to as the Amazon.com of Latin America, and like Amazon, company management has been focused on growth at the expense of profitability. But if fourth-quarter results are any indications, those investments look to be paying off, and MercadoLibre seems well on its way to being not just a dominant e-commerce player but also a massive payments provider in the region, with a lot of potential to grow.