Mercadolibre (MELI 12.69%) stock tumbled 11% through 11:10 a.m. ET Friday after reporting mixed earnings for Q1 2026 last night.
Analysts had forecast the Latin American e-commerce giant would earn $9.37 per share on $8.3 billion in sales. Mercadolibre beat the sales forecast with $8.8 billion in revenue, but whiffed on earnings -- just $8.23 per share.
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Mercadolibre Q1 earnings
Mercadolibre's sales surged 49% year over year as the company worked to grow its business now, and worry about profits later -- to ill effect. Operating income declined 20% year over year as the company ate more of the cost of free shipping in markets such as Brazil and made other growth investments.
These helped drive gross merchandise volume ("GMV" -- the value of all the products Mercadolibre sold) up 36% globally and 38% in Brazil in particular, and grew the number of Brazilian subscribers patronizing Mercadolibre by 49%.
GMV grew 28% year over year in Mexico, 40% in Chile, and 41% in Argentina, excluding foreign currency fluctuations.
Free cash flow exploded higher despite the hit to GAAP profits -- $1.8 billion in Q1 2026, versus just $759 million in Q1 2025.
NASDAQ: MELI
Key Data Points
Is this good or bad new for Mercadolibre?
Investors are clearly spooked by the falling GAAP profits, but from a free cash flow perspective, Mercadolibre still looks healthy. The company has generated $11.8 billion in positive FCF over the past 12 months -- nearly 10x reported net income under GAAP. "Thanks" to today's sell-off that has cut its market capitalization to $84 billion, that works out to just a 7.1x price-to-free cash flow ratio on the stock.
Now, if Mercadolibre can just figure out a way to grow the numbers investors care about, the stock would look ridiculously cheap at this price.
