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Why MercadoLibre Stock Jumped on Thursday

By Daniel Sparks - Updated Jan 28, 2021 at 5:44PM

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Is it a good recovery play?

What happened

Shares of Latin American e-commerce company MercadoLibre (MELI -9.61%) jumped on Thursday, closing the trading day up 7.3%.

The growth stock's gain is likely due to a combination of a bullish overall market on Thursday and a recent price-target increase for the stock.

A chart showing a stock price rising

Image source: Getty Images.

So what

Highlighting the upbeat day in the overall market on Thursday, the S&P 500 rose about 1%. Many growth stocks like MercadoLibre saw their shares rise even more sharply.

Also potentially helping the stock was a recent analyst upgrade. On Wednesday, Deutsche Bank analyst Kunal Madhukar increased his 12-month price target for the stock from $1,530 to $2,200. Supporting his buy rating, he said the company is well positioned to benefit from a post-pandemic recovery. 

But another analyst wasn't quite as bullish this week. Richard Cathcart of BBI downgraded his rating from outperform to neutral and gave the stock a $2,000 12-month target. That is still above the stock's $1,845 price as of this writing. 

Now what

MercadoLibre has seen its revenue surge in recent quarters. In the third quarter of 2020, revenue soared 85% year over year in U.S. dollars and nearly 150% year over year on a currency-neutral basis. Growth in the quarter was fueled by a 92.2% year-over-year increase in unique active users and a more than doubling of items sold over the same time frame. 

Investors will look for more strong momentum when the company reports its fourth-quarter results in early February.

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Stocks Mentioned

Mercadolibre, Inc. Stock Quote
Mercadolibre, Inc.
MELI
$699.86 (-9.61%) $-74.44
Deutsche Bank Stock Quote
Deutsche Bank
DB
$10.89 (2.25%) $0.24

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