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Here's Why MercadoLibre Stock Is Soaring Today

By Matthew Frankel, CFP® - Mar 11, 2021 at 1:50PM

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The e-commerce and fintech specialist is having an excellent day, but it's not because of any company-generated news.

What happened

The stock market was having a strong session on Thursday, with all three major indexes well into positive territory. However, Latin America e-commerce and fintech specialist MercadoLibre (MELI 8.36%) was a particular standout. As of 1 p.m. EST, shares of the fast-growing company were higher by more than 9%.

So what

There are two likely reasons for today's move. First, MercadoLibre has been hit hard in the recent tech sector slump, and most of those beaten-down stocks are rebounding sharply. In fact, the tech-heavy Nasdaq is by far the best-performing index of the day, up by nearly 3%.

Packages on a conveyor system.

Image source: Getty Images.

Second, MercadoLibre received an analyst upgrade. BTIG upgraded MercadeLibre from neutral to buy and announced a $1,720 price target. Even after today's sharp rally, this implies another 10% upside.

Analysts are rather divided on MercadoLibre. While the stock has a bullish rating by most analysts who cover it, price targets range from a low of $1,075 to a high of $2,500, so today's upgrade is certainly encouraging. And it follows an upgrade by J.P. Morgan just a few days ago.

Now what

To be sure, analyst upgrades and downgrades don't have any effect on a company's business and don't change the long-term investment thesis. However, there are many investors who decide what stocks to buy and sell based on analyst opinions, and upgrades can certainly result in upward pressure in a stock's price as buyers rush in. And that's what we're seeing today.

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Stocks Mentioned

Mercadolibre, Inc. Stock Quote
Mercadolibre, Inc.
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