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Why MercadoLibre Shares Gained 16% Last Month

By Anders Bylund - Updated Feb 10, 2020 at 3:49PM

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The Latin American e-commerce veteran signed a game-changing deal, followed by a flurry of bullish analyst notes ahead of this week's fourth-quarter report.

What happened

Shares of Latin American e-commerce giant MercadoLibre (MELI -2.04%) rose 15.9% in January, according to data from S&P Global Market Intelligence. The climb was powered by rosy analyst comments, which in turn were based on a new partnership that could be a game changer in the long run.

Close-up picture of a white computer keyboard, focused on a blue shopping-cart key next to the Enter key.

Image source: Getty Images.

So what

Having signed a close partnership with American digital payments specialist PayPal (PYPL 0.44%) at the very end of December, MercadoLibre started the year with a flurry of bullish analyst notes based on that deal. Heading into this evening's fourth-quarter earnings report, the positive analyst chatter never really stopped.

For example, Piper Sandler analyst Michael Olson wrote that the fourth quarter should look "strong" with solid gains across all of the company's key metrics.

Now what

It's hard to overstate the potential growth for this market-leading operator in an explosive growth market. Latin American consumers are getting used to online shopping in a hurry, a trend that only accelerates as they get access to more reliable payment systems. MercadoLibre is deliberately leading the way for that crucial market revolution, now adding PayPal's global heft to its own MercadoPago payment service. Patient investors with a hankering for high-growth opportunities in a rapidly developing economic area should definitely consider owning MercadoLibre, even though the stock nearly doubled in 52 weeks and MercadoLibre remains unprofitable.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends MercadoLibre and PayPal Holdings. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Mercadolibre, Inc. Stock Quote
Mercadolibre, Inc.
MELI
$977.52 (-2.04%) $-20.38
PayPal Holdings, Inc. Stock Quote
PayPal Holdings, Inc.
PYPL
$99.86 (0.44%) $0.44

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