MercadoLibre (NASDAQ:MELI) and Facebook (NASDAQ:FB) are both high-growth tech companies that dominate their respective markets.

MercadoLibre is the largest e-commerce company in Latin America. It served 132.5 million unique active users across 18 countries in 2020. Facebook's namesake platform is the world's largest social network, and the company also owns Instagram and WhatsApp. Roughly 3.3 billion people access its family of apps each month.

MercadoLibre's stock price has skyrocketed about 1,170% over the past five years as it dazzles investors with its explosive growth in gross merchandise volumes, active users, and revenue. Facebook's stock price has rallied 180% during the same period as its number of users and ad revenue keep climbing.

A cloud of social networking connections.

Image source: Getty Images.

MercadoLibre has clearly been the better growth stock, but will it continue to outperform Facebook? Let's take a fresh look at both tech giants and see if we can answer the question.

Comparing their business models

MercadoLibre operates two main businesses. Its commerce business, which generated 64% of its revenue in fiscal 2020, collects commissions and shipping fees from its sellers. Its fintech business, which generated the rest of its revenue, houses is payment service Mercado Pago and its credit platform Mercado Credito.

MercadoLibre's three largest markets are Brazil (which generated 55.2% of its revenue last year), its home market of Argentina (24.7%), and Mexico (14.5%). All three markets, along with many other Latin American countries, are struggling with inflation, which significantly reduces the company's growth in U.S. dollars.

Facebook generated 98% of its revenue from its ads in fiscal 2020. The remaining sliver mainly came from its Oculus VR headsets and Portal smart screens.

It generated 45% of its revenue from the U.S. and Canada, 24% from Europe, 23% from the Asia-Pacific region, and just over 8% from the rest of the world. It generates the highest average revenue per user (ARPU) in the U.S. and Canada, but those two markets are gaining new users at much slower rates than its other three markets.

Comparing their growth rates

MercadoLibre's revenue rose 73% to $3.97 billion in fiscal 2020. On a constant currency basis, which cuts through all the messy inflation rates across Latin America, its revenue surged 126%.

The COVID-19 pandemic, which caused more people to stay at home and shop online, contributed to that growth. The company's unique active users rose 79% for the year, its gross merchandise volume (GMV) grew 50% to $20.9 billion, and its total payment volume (TPV) increased 75% to $49.8 billion. Its net loss also narrowed significantly from $172 million to just $707,000.

Analysts expect MercadoLibre's revenue to rise 47% this year as it faces tougher year-over-year comparisons in a post-pandemic world. However, it's also expected to post a full-year profit as it reins in its spending and economies of scale kick in.

A parcel with the Brazilian flag, placed in a tiny shopping cart on top of a laptop keyboard.

Image source: Getty Images.

Based on those estimates, MercadoLibre trades at 240 times forward earnings and 14 times this year's sales. Those valuations are high, but its dominance of Latin America's e-commerce market, its expanding fintech ecosystem, and its long-term growth opportunities in less developed markets could all justify that premium.

Facebook's revenue rose 22% to $86 billion in fiscal 2020. Its advertising revenue grew 21%, even after weathering a pandemic-induced slowdown in the first half of the year, while its other revenue increased 72% as it sold more Oculus VR headsets throughout the pandemic.

Facebook's monthly active users (MAUs) increased 12% to 2.8 billion, as its total number of MAUs across all of its family of apps grew 14% to 3.3 billion. Its worldwide ARPU also grew both sequentially and year over year in the fourth quarter of the year, and its net profit increased 58% to $29.1 billion.

Analysts expect Facebook's revenue and earnings to rise 25% and 12%, respectively, this year. The pandemic-related pressure on its advertising business should ease, but it could struggle with new privacy changes in iOS and Android for targeted ads, and unresolved antitrust challenges in the U.S. and Europe.

Facebook's stock initially seems cheap at 23 times forward earnings, but that lower multiple reflects its unpredictable challenges this year.

The winner: MercadoLibre

MercadoLibre's stock is expensive, but the company should continue to generate high double-digit sales growth with improving profits for the foreseeable future.

It still only has an enterprise value of $80 billion, which is tiny compared to Amazon's EV of $1.73 trillion. Therefore, it's easy to see MercadoLibre generating even more multibagger returns as mobile penetration rates and income levels climb across Latin America. Stabilizing inflation rates could amplify those gains.

Facebook initially seems undervalued relative to its growth, but it already serves nearly half of the world's population and is worth over $830 billion. It faces a lot of near-term headwinds, and it's doubtful that it will grow at a faster rate than MercadoLibre over the next few years.

MercadoLibre is the more volatile stock, but I think it's still a better long-term bet for growth-oriented investors than Facebook.

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.