Ordinarily, this is how things work in the stock market: First, a stock reports bad earnings news, then its stock goes down -- but on Thursday, MercadoLibre (MELI -1.96%) flipped that script.

First, shares of the Latin American e-commerce giant plummeted in Thursday's global tech rout, closing the day down 10.8%. It was only after the market closed for the day that MercadoLibre reported its first-quarter earnings had missed expectations, coming in $0.06 shy of analysts' $1.36-per-share forecast.

The good news: MercadoLibre's $2.2 billion in quarterly revenue beat forecasts for $2 billion. In my view, this was the most important takeaway from MercadoLibre's Q1 report.

Person reclining on a couch and shopping online with a credit card.

Image source: Getty Images.

MercadoLibre facilitated the sale of $7.7 billion worth of gross merchandise volume in Q1, up 27% from last year's Q1. Payment volume was up 81% to $25.3 billion. And the fees MercadoLibre took from these businesses, which constitute the company's sales, grew 63% in U.S. dollars. Back out exchange rate fluctuations, and the currency-adjusted revenue actually grew closer to 67%, meaning that in just the past year, MercadoLibre's business has grown two-thirds in size.

Sometimes bigger is better

As MercadoLibre gets bigger, it also gets more profitable, gaining economies of scale. MercadoLibre may not have earned quite as much profit as Wall Street had predicted, but its gross profit margin on sales improved by nearly 5 full percentage points, to 47.7%, helping to flip the company from a $0.68-per-share loss a year ago to a $1.30-per-share gain this year.

And the improvements keep coming. In addition to facilitating buying and selling goods sold on its platform, MercadoLibre is also growing its shipping business, Mercado Envios. MercadoLibre says this has turned out to be a "transformational service" for its business, and that today, it facilitates delivery of more than 90% of the goods sold on its platform in South America and Latin America. And as management explains, "logistics is ... an operational efficiency business, [which gets better] through the scaling process."

Which is to say, the bigger MercadoLibre gets in terms of merchandise sold, the more efficient its delivery business will become as well.

What does all of this mean for investors in dollars and cents? Valued at $46 billion today, MercadoLibre sells for an exceptionally pricy 117 times trailing free cash flow. And yet, according to estimates surveyed by S&P Global Market Intelligence, analysts see MercadoLibre more than doubling its profits annually every year for the next five years -- a bold claim, but MercadoLibre is growing off such a small base that it's not inconceivable.

As expensive as the stock looks today, if MercadoLibre can live up to the hype, the stock might actually be cheap enough to buy today.