Shares of Latin America's MercadoLibre (NASDAQ:MELI) surged higher on Monday, and there was no clear catalyst. The stock finished 8% higher for the day without a press release or a filing with the Securities and Exchange Commission.
But it's possible that renewed coronavirus fears have investors betting on MercadoLibre, and that certainly worked out well earlier this year. The stock is up 87% year to date, and up 140% from where shares hit bottom on April 1.
Consider the news that's coming out today. Major League Baseball just started its coronavirus-modified season -- devoid of fans in the stadiums and with loads of preventative measures. Nevertheless, it's now had to postpone the home opener of the Miami Marlins after multiple players tested positive for COVID-19.
And Kentucky appears to be tightening up its restrictions once again. Bars will shut down for two weeks, and restaurants will have even stricter dine-in seating limits. This feels like we are moving further away from "back to normal."
But MercadoLibre operates in Latin America, so the news I just referenced doesn't affect those countries. That's why it's difficult to understand what's truly moving the stock today. Any correlation with today's news is pure speculation. That said, the COVID-19 pandemic drove MercadoLibre's adoption earlier this year as consumer trends were forced to change. That could be a long-term tailwind for its business.
MercadoLibre is really two businesses: e-commerce and digital payments. Both stand to benefit if consumers are forced to stay home and perform more shopping transactions online. Latin America is also a region where the economy hasn't undergone much digital transformation to date, so there's lots of room for change and long-term growth.
This international stock is expected to report earnings on July 30. At that time, MercadoLibre's management will be able to give shareholders much better insight into shifting consumer trends.