Shares of MercadoLibre (NASDAQ:MELI), the Latin American e-commerce operator, were sliding last month in tandem with the coronavirus-related sell-off. Though there was no specific news out on the company, investors saw the spreading pandemic, which is just starting to affect Latin America, as a concern for the high-priced growth stock . According to data from S&P Global Market Intelligence, the stock finished the month down 21%.
The stock tracked close to the S&P 500 for much of the month.
Coronavirus cases is Latin America have only recently begun to climb. Brazil now has more than 6,000 recorded cases, and Mexico, Argentina, and Colombia each have more than 1,000. However, countries have yet to impose the same kind of measures we've seen in the U.S. so it's not yet clear how MercadoLibre will be affected. In Brazil, the region's most populous country and MercadoLibre's biggest market, President Jair Bolsonaro, has continued to downplay the threat and refused to implement lockdown measures that have become commonplace in countries afflicted with the virus.
Even so, the coronavirus may not be all bad news for MercadoLibre. In the U.S., demand for products from Amazon.com, the closest thing to an analog for MercadoLibre, has spiked during the crisis as stores are closed and customers look to it to deliver essential products. MercadoLibre doesn't own its own supermarket chain like Amazon does, so it may not be as well positioned for the crisis, but its payment network, MercadoPago, could also see heavy demand as more shopping moves online.
At this point, MercadoLibre may also be fairly priced for the incoming crisis, given that shares have already fallen 40% from its peak before the market crash. If the pandemic cripples the Latin American economy as it's doing with much of the rest of the world, then MercadoLibre is likely to see sales growth slow, but many of the risks in the stock already seem priced in.