Please ensure Javascript is enabled for purposes of website accessibility

Could Sea Limited's Move to Latin America Stall MercadoLibre's E-Commerce Engine?

By Brian Withers and Brian Stoffel – May 15, 2021 at 7:02AM

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

These two companies are at very different stages of maturity.

MercadoLibre (MELI -0.23%) has been operating in Latin America since 1999, but the region has recently attracted another global e-commerce player. Sea Limited (SE 4.51%), known for its Garena online gaming platform and its e-commerce business in Southeast Asia, has started operating its Shopee e-commerce business in two key markets in Latin America. On a Fool Live episode recorded on April 28, Fool contributors Brian Stoffel and Brian Withers discuss whether this new entrant could be a threat to the long-standing market leader.

Brian Stoffel: Brian, I've had a lot of people on Slido, on Twitter, saying, what do you think about Sea Limited? For a long time, I was like, well, Sea Limited, they just have a game that's popular there, that's all, and you can talk about that. But then I realized Sea Limited, Shopee is actually moving into Latin America. For those unfamiliar, Sea Limited is focused on Southeast Asia, that's where the Sea comes from. Is this something you're worried about?

Brian Withers: Yeah. Surprisingly, I was trying to find detail on how much of the revenue in Latin America was related to the gaming business and how much was related to Shopee. They haven't split it out, but the Latin America region makes up 18% of Sea Limited's overall 2020 revenue. It's actually a pretty big part of their business. But you got to remember their gaming business has been up and running for a much longer period of time, and actually their Free Fire game is available in over 130 markets globally.

But the Shopee business, it started in Brazil in the fourth quarter of 2019, and Mexico started in the first quarter of 2021, so Brazil has been up a little bit more than a year, and Mexico is really just getting started. I did see some reports that indicated the e-commerce division is hiring, get this, several dozen employees in Brazil. [laughs] You got to remember Shopee is a very asset-light, it's a software person-to-person platform. This is compared to 5,000 employees for MercadoLibre in the country [Brazil], and it's more than doubling this year to exceed 12,000.

I actually think having more players in the region just brings more attention to e-commerce, and I think MercadoLibre, with its long-standing management and significant investment in the region, will continue to win even if Sea Limited continues to grow from their small base.

Brian Stoffel: I agree completely.

Brian Stoffel owns shares of MercadoLibre and Sea Limited. Brian Withers owns shares of MercadoLibre and Sea Limited. The Motley Fool owns shares of and recommends MercadoLibre, Sea Limited, and Twitter. The Motley Fool has a disclosure policy.

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.
$827.78 (-0.23%) $-1.90
Twitter, Inc. Stock Quote
Twitter, Inc.
$43.84 (2.57%) $1.10
Sea Limited Stock Quote
Sea Limited
$56.05 (4.51%) $2.42

*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 10/01/2022.

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.