Shares of MercadoLibre (MELI +0.42%) were soaring last month as the Latin American e-commerce leader delivered another strong earnings report, reassuring investors of its growth potential despite economic troubles in Argentina.
According to data from S&P Global Market Intelligence, the stock gained 18% last month. As you can see from the chart, the stock popped initially on the earnings report at the beginning of May, and then moved higher over the course of the month, in line with broader market trends.
MercadoLibre scores another win
Shares of MercadoLibre jumped 8% on May 3, kicking off the month with strong first-quarter earnings numbers.
The company continued its streak of rapid growth in both e-commerce and digital payments, reporting gross merchandise volume (GMV) up 71% on a currency-neutral basis and total payment volume up 86% in constant currency.
Overall revenue rose 36%, or 94% on a currency-neutral basis, to $4.33 billion, which was well ahead of the consensus at $3.85 billion.
MercadoLibre showed off strong growth in Brazil, where approximately half of its revenue comes from, with GMV up 30%. It also saw similar growth in Mexico, another one of its top markets.
The company noted solid traction in MELI+ loyalty program, which offers benefits similar to Amazon Prime, like free shipping and streaming content in partnership with third-party streaming services.
On the bottom line, operating income adjusted for a reclassification of interest income, and expenses rose 44% to $477 million, and earnings per share jumped from $3.97 to $6.78, benefiting in part from lower foreign currency losses. That result also beat estimates at $6.03.
Analyst response to the report was mixed, as a number of Wall Street analysts lowered their price targets in response to signs that MercadoLibre's margins would tighten. However, most analysts still give the stock a buy-equivalent rating.
Over the rest of the month, the stock drifted higher as the Nasdaq Composite returned to record highs on strong earnings reports from Nvidia and other tech leaders, as well as on signs that interest rate cuts were becoming more likely.
Image source: Getty Images.
What's next for MercadoLibre?
MercadoLibre didn't give guidance, but noted some incremental pressure on margins related to the growth of its credit business and an increase in delinquencies, as well as challenges in the Argentine economy.
However, the overall business still looks rock-solid and has a promising growth path ahead of it, especially as it's successfully fended off competition from Amazon, Sea Limited's Shopee, and others. The stock should also have some upside potential, as it's still down more than 15% from its peak during the pandemic.
