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Often overlooked in favor of the U.S. and China, South America is one of the most exciting regions on the planet for investors. Once associated predominantly with political instability, poverty, and organized crime, the continent is now a globally recognized exporter not just of raw materials but of businesses, technology, and highly educated workers. Brazil, in particular, is often upheld as a potential economic superpower. In fact, all of the region's major constituent countries -- with the dramatic and headline-generating exception of Venezuela -- are expected to see GDP growth in the range of 2% to 4% by 2021. 

Of all South America's success stories, few have been more impressive than that of MercadoLibre (NASDAQ:MELI). The largest e-commerce platform on the continent, MercadoLibre boasts more than 180 million active users across key Latin American markets, including Brazil, Mexico, and Argentina. These figures are especially noteworthy considering that only about 60% of Latin Americans are estimated to have an internet connection.

MercadoLibre -- Spanish for "free market" -- was founded in 1999 by Marcos Galperin, a Stanford-educated Argentine, as an online marketplace dedicated to online sales and auctions. Within a year, the company's reach had extended out of Argentina to Uruguay and Mexico, and was even drawing attention from investors in the U.S. In 2001, eBay purchased a 19.5% stake in the business. As part of the deal, the U.S. e-commerce giant provided MercadoLibre with access and know-how, and at the same time agreed not to enter the South America region. (A decade later, eBay sold its MercadoLibre shares, but the two companies still collaborate.)

The top part of a Spanish Colonial building, with colorful flags in the foreground

Image source: Unsplash.

In 2003, MercadoLibre launched one of its most enduring features, the payment service MercadoPago. Originally conceived as a method for facilitating transactions on the site, the service has grown into a hugely popular platform in its own right. The company's most recent earnings report revealed that this growth is not letting up, with traffic doubling and total payment volume soaring 47% year over year to over $6.5 billion. With its triple offering of e-commerce, online auctioning, and digital payments, MercadoLibre has been described as Latin America's answer to PayPal, Amazon, and eBay, all rolled into one.

The company made its stock market debut in 2007, resulting in net proceeds of $49.6 million. The IPO was something of a record: MercadoLibre was in fact the first South American tech company to be listed on the Nasdaq exchange. Since then, the company has been steadily improving and diversifying its operations, mostly through strategic acquisitions. Beginning in 2014, MercadoLibre went on something of a spending spree, buying up regional software companies including Business Vision and Monits, as well as the classified-advertising platform Metros Cubicos.

To top it all off, MercadoLibre has had an excellent year so far. A major moment for the business came in March when PayPal agreed to invest $750 million in return for a roughly 3% stake, confirming suspicions that MercadoPago is one of the brightest stars in its future. Furthermore, the company's August earnings report saw it surpass consensus estimates for the fourth time in a row.

Committed as it is to long-term investment in its brand, MercadoLibre doesn't currently issue quarterly guidance. However, analysts are expecting to see year-over-year revenue growth of 50% by the end of next quarter. If this figure seems a touch ambitious, it only speaks of how impressed Wall Street has been to date. Of course, threats to growth exist for the company, notably from Amazon. For the moment, the e-commerce giant has a limited presence in South America, but news in 2017 that it was recruiting in Brazil triggered a 10% drop in MercadoLibre stock. Beyond that, the relative instability of the region means that making predictions is even harder than usual in this case.

"We are pleased and optimistic about how 2019 is playing out for us," said MercadoLibre CFO Pedro Arnt in the second-quarter earnings release. "We delivered another very strong quarter as we continue to grow and scale our leading e-commerce and fintech ecosystems across Latin America."

Long may it last.

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MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Mercado Libre. Read our full disclosure policy here.