Please ensure Javascript is enabled for purposes of website accessibility

Why MercadoLibre Stock Popped Before Earnings Today

By Rich Smith - Mar 1, 2021 at 1:05PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Earnings news is due out in a few hours -- but sales growth may be more important than profits.

What happened

Shares of Argentine e-commerce star MercadoLibre (MELI -0.73%) are shooting higher Monday, up 3.9% as of 1:35 p.m. EST after analysts at investment bank Credit Suisse gave the stock a lift -- and a higher price target.

So what

MercadoLibre stock, which sells for just under $1,700 currently, will be worth $1,925 a share within 12 months, argues Credit Suisse in a note covered today on

CS cites an unspecified preannouncement of fourth-quarter earnings results (the official results are due out this evening, after close of trading), arguing that the company's anticipation of an operating loss for Q4 implies that MercadoLibre is not concerned with making a profit right now, but rather is returning to "the more aggressive growth path it set out for itself back in 2017," reports TheFly.  

Stock up glowing green arrow climbs on a stock screen

Image source: Getty Images.

Now what

Most analysts who follow the stock are still hoping that MercadoLibre will report both revenue growth and a profit, however. According to the latest collation of estimates prepared by Yahoo! Finance, MercadoLibre's expected to report a $0.05-per-share profit this evening, and 79% sales growth to $1.2 billion.

If CS is right, however, it may not matter if MercadoLibre misses on earnings tonight, so long as its sales growth rate is sufficiently speedy -- basically a "heads MercadoLibre wins, tails it doesn't lose" prediction. Investors seem to like the sound of that.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Mercadolibre, Inc. Stock Quote
Mercadolibre, Inc.
$660.13 (-0.73%) $-4.87

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.