The board of directors of MercadoLibre (MELI 1.96%) authorized a share-repurchase program on Monday, according to a filing with the Securities and Exchange Commission (SEC). The company is authorized to buy back up to $350 million of its own stock between now and Aug. 31, 2021. 

While many companies have ongoing stock buyback programs as a way to return capital to shareholders, this is new for MercadoLibre. It wasn't previously authorized to repurchase common stock in this way. Rather, it invested all cash back into the business to fuel growth. Investing in growth was also why the company discontinued its dividend after fiscal 2017.

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A growing opportunity

A growing e-commerce and fintech powerhouse in Latin America, MercadoLibre has thrived in 2020 despite the COVID-19 pandemic. In reality, the coronavirus is pushing the adoption of online shopping and cashless payments in this underserved region, playing to the company's strengths. Indeed, net revenue soared 123% year over year to $878 million in the second quarter of 2020.

Profitability also increased in Q2 partly because it spent less on marketing. CFO Pedro Arnt said this was "a result of the extraordinary growth in organic demand brought about by the effects of the COVID-19 pandemic on consumer behavior."

MercadoLibre's market capitalization is around $60 billion, meaning the buyback program is for around 1% of shares. However, investors should remember the company doesn't guarantee it will actually go through with the plan. It's merely authorized to repurchase shares over the next year at its discretion.