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Why MercadoLibre Stock Jumped Today

By Rich Smith - Jan 8, 2021 at 12:23PM

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Will the e-commerce company build an electric car?

What happened

Shares of Argentine e-commerce star MercadoLibre ( MELI -7.09% ) were up 5.7% at 11:40 a.m. EST on Friday after the company announced a pair of big debt offerings.

So what

In a press release, MercadoLibre said it will offer $400 million worth of debt paying 2.375% interest and maturing in 2026, and also $700 million worth of debt paying 3.125% and maturing in 2031. The company noted that this will be its first offering of debt securities. MercadoLibre has issued only about 5.6 million new shares in the past five years, funding its expansion instead almost entirely from the success of its business.  

Now, it seems, MercadoLibre is preparing to embark upon a new stage of growth, and needs more cash to accomplish it. As management explained, "MercadoLibre intends to use the net proceeds from the sale ... to finance or refinance ... environmental objectives such as: clean transportation, land conservation and preservation, energy efficiency, renewable energy, green buildings and pollution prevention and control."

Cartoon of a yellow car plugged into an electric charging station

Image source: Getty Images.

Now what

It seems to me that what MercadoLibre is saying is that it's about to broaden its business with investments into such ultra-hot sectors of the stock market as electric cars and renewable energy -- and the corollary "green" activities described, of course.

But I think the exciting part of today's press release is the company's apparent desire to get into EVs and renewable energy. To me, at least, that's the theory that best explains the enthusiasm surrounding MercadoLibre stock today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Mercadolibre, Inc. Stock Quote
Mercadolibre, Inc.
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