Shares of MercadoLibre (MELI +1.30%) stock gained 10% in February, according to data provided by S&P Global Market Intelligence. It released a fantastic earnings report, assuaging fears about economic volatility in its operating region and inspiring investor confidence in its short- and long-term potential.
Unstoppable e-commerce and more
MercadoLibre runs an e-commerce platform in 18 Latin American countries. It's the leading company of its kind in the region, giving it a first-mover's edge and a lot of leverage. It's using those advantages well, turning its company from a pure-play e-commerce giant into a huge, expanded enterprise with a slew of financial services and other segments.
MercadoLibre has reported high growth for a long time, and there's no sign of letting up. And while it's sacrificed some profits for the sake of growth at other times, the fourth quarter was uniformly phenomenal across metrics.
NASDAQ: MELI
Key Data Points
Revenue increased 96% (currency neutral) year over year, gross merchandise volume was up 56%, and total payment volume was up 49%. That's strong performance across its business, both on the e-commerce and financial services sides. Net income increased 278%, and free cash flow increased 111%.
It's also growing its credit portfolio, which was up 74% year over year in the quarter, while assets under management increased 129%. It's growing its financial services business and has plans to launch its first digital bank in Mexico.
What really stands out about the company, though, is its continued opportunity. E-commerce is still a small percentage of overall retail in MercadoLibre's operating markets, lagging the U.S. by a decade or so. If you can think back to what U.S. e-commerce looked like in 2015, that gives you a sense of what's at stake here. MercadoLibre had 24% more unique buyers in the 2024 fourth quarter than the year before, and there's so much more to go.
Is there any reason to be cautious?
MercadoLibre stock had been dipping toward the end of last year. Two of its main markets, Argentina and Brazil (the other is Mexico, which has its own issues), have been dealing with high economic volatility and currency devaluation. But the company's robust performance is breeding greater confidence in its ability to withstand the pressure and continue to drive toward its opportunities.
At the current price, MercadoLibre stock trades at a forward, one-year P/E ratio of 33, which looks like an incredible bargain for this high-growth stock, meaning now is a great time to buy shares.
