MercadoLibre (MELI 0.58%) is making a strong case for being the Amazon (AMZN 0.58%) of Latin America. Not only has it become a leading online retailer in its home region, but it has also become a key player in areas such as fulfillment and shipping.

However, it has also earned outsized gains since its IPO, leading investors to question whether the retail stock can still grow enough to mint millionaires.

A shopper makes a purchase on a smartphone while outside.

Image source: Getty Images.

The case for MercadoLibre

MercadoLibre operates in a region that many investors believe is a difficult place to do business. Its three largest markets are Argentina, Brazil, and Mexico. According to the World Bank's ease of doing business rank, these country's rankings came in at 126, 124, and 60, respectively. High inflation, transportation difficulties in remote regions, and conducting e-commerce in cash-based societies are among its challenges.

MercadoLibre owes much of its success to finding ways to address such issues. It formed Mercado Envios, a fulfillment service that stores and delivers products in Mexico and Chile. To achieve this, it has invested heavily in fulfillment centers that can give it a competitive advantage comparable to Amazon, which has also built fulfillment centers and supply chains worldwide. Additionally, it outsources fulfillment services to businesses, similar to Shopify's fulfillment network in the U.S. and Canada.

Furthermore, to better serve cash-dependent customers, it created Mercado Pago. The company initially created this subsidiary to help cash-dependent customers purchase from MercadoLibre. However, the service has become so successful it has branched out into providing fintech services for other purposes. This has forged a separate niche in the fintech industry since companies such as PayPal offer limited functionality without debit or credit cards.

MercadoLibre's financials

The company's fantastic growth has not gone unnoticed. MercadoLibre products and services helped it bring in just under $1.9 billion in revenue for the first nine months of 2021. This represents a 66% increase from the same period in 2020. Moreover, its profit of $95 million surged by more than sixfold as higher interest income along with lower interest, foreign currency, and income tax expenses boosted the bottom line.

Thanks to this success, its stock has risen by more than 62-fold since the launch of its IPO in 2007. It has also achieved a market cap of around $56 billion, which could make investors hopeful that it follows in the steps of e-commerce pioneer Amazon, which now supports a market cap of more than $1.75 trillion.

Not surprisingly, it remains a more expensive stock that sells at about nine times sales compared with a price-to-sales (P/S) ratio of around four for Amazon. While Amazon continues to produce considerable revenue growth for its size, MercadoLibre's smaller market cap will probably make massive stock growth less challenging than it will be for Amazon.

Will MercadoLibre help investors become millionaires?

Despite the growth prospects, how much help MercadoLibre's stock can help make an investor a millionaire depends on the size of the investment.

As conditions stand now, Amazon's market cap is about 31 times larger than MercadoLibre's. if MercadoLibre is able to eventually match Amazon's current market cap (however long that takes), that would mean that a $10,000 investment now would grow to as much as $310,000. So small investors buying the stock now will likely not become millionaires through MercadoLibre alone.

However, a 31-fold return would represent a meaningful return on one's money. This could still make MercadoLibre a key holding in the journey to achieve that $1 million net worth.