MercadoLibre (MELI -0.40%) is often referred to as the Amazon of Latin America. But while it does have a massive e-commerce operation, there is an entirely different side of the business that often gets overlooked. In this Motley Fool Live clip, recorded on Jan. 24, Fool.com contributors Matt Frankel and Jon Quast explain why they're so bullish on this international growth stock.
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Matt Frankel: Ticker symbol MELI. It is not the worst performer. It's only down 51% from its peak -- only. MercadoLibre often gets called the Amazon of Latin America, but I would actually amend that. MercadoLibre is the Amazon, PayPal, Square, eBay, maybe even the Shopify of Latin America, all in one stock and at a much earlier stage in the business cycle.
They have their e-commerce marketplace. They also have their fintech division, which is Mercado Pago, their payment processing business. Think of that relationship as eBay and PayPal back when they were the same company. PayPal started off processing eBay's transactions, then gradually moved off platform and started processing for everybody, and now eBay is nothing to PayPal. This is what's happening with Mercado Pago, slowly its volume off of MercadoLibre's marketplace is more than it is on marketplace.
Still at a very early stage, their marketplace volume is roughly 6% of what Amazon sells. Their payment processing volume's roughly 7% of PayPal's last I looked. Still a much earlier stage business. Latin America in general is much earlier than we are in terms of e-commerce, in terms of cashless payments, most transactions down there still take place in cash. A nice early stage opportunity to get in. Just to show you some of these statistics from the past year or so. Bear with me here, there are 500 charts open on my screen. There we go. If you look at some of these growth numbers, and this is on top of the pandemic boost.
In 2020, MercadoLibre's revenue was growing over 100% a quarter. Now it's normalized a little bit. But in the third quarter of 2021, revenue was up. If you look on the top right little block there, up 73% year over year in the third quarter on top of the pandemic boost. Their payment volume is up 59% year over year to a little over $80 billion annually. Off platform is about two-thirds of that now, that was up 79% year over year. I mentioned the PayPal branching out, same idea there.
The credit portfolio on the bottom right, that's a pretty new business for them. They're starting to lend money to some of their customers. That's quadrupled year over year. MercadoLibre is growing great. It actually just went under $1,000 for the first time since early pandemic. Now, I don't know if I'm happy that we've learned about some of these stocks on the show. We're upset that now none of us can go buy any of them because we've talked about them. I don't know which way I'm leaning on that. But, guys, any thoughts on MercadoLibre?
Jon Quast: It's just a fantastic business over the long term. I think short term that there are a little bit of concerns with some of the economies that they operate in. Are they going to continue to struggle with inflation and different things like that? But long term, and I'm talking this decade, this should be MercadoLibre's decade, and you're getting one of the cheapest valuations you've ever gotten.