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This E-Commerce Stock Is Looking Historically Cheap

By Jose Najarro – Dec 7, 2021 at 5:15AM

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Mercadolibre's price-to-sales ratio is near five-year lows.

Today's video focuses on Mercadolibre (MELI 4.05%), recent news affecting the company, and its earnings report released on Nov. 4. Here are some highlights from the video.

  1. Mercado Pago, Mercadolibre's fintech service, continues to release new products. On Dec. 2, Mercado Pago began offering customers in Brazil the ability to buy, sell, and hold specific cryptocurrencies. The ability to make investments and transactions with cryptocurrencies could entice new users to its platform. 
  2. The price-to-sales ratio for Mercadolibre is sitting near 8.8. The last time the sales ratio was this low was in 2017. Still, in its most recent earnings report, Mercadolibre reported strong double-digit growth in revenue and total gross market volume in its three main operating markets: Brazil, Argentina, and Mexico. 
  3. Some of the bearish sentiments that have been following Mercadolibre are the following. First, on Nov. 16, Mercadolibre announced the pricing of its public offering of 1 million common shares. Second, the company has low-single-digit profit margins. Finally, the increase of e-commerce competition in Latin America might have some investors worried. 

Click the video below for my full thoughts and analysis. 

*Stock prices used were the midday prices of Dec. 6, 2021. The video was published on Dec. 6, 2021.

Jose Najarro owns shares of MercadoLibre. The Motley Fool owns shares of and recommends MercadoLibre. The Motley Fool has a disclosure policy. Jose is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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