The race for round numbers has taken MercadoLibre (MELI -0.27%) to some great heights over the years. The Latin American e-commerce and fintech leader wasn't always a juggernaut. It topped $1 billion in annual sales for the first time in 2017. MercadoLibre cleared the $10 billion hurdle in 2022.
Growing its business tenfold -- or, in this case, nearly tenfold, as it went from $1.2 billion in 2017 to $10.8 billion -- in five years is impressive. It's not likely to take just five years to grow its business tenfold again. That would mean MercadoLibre hits the $100 billion mark next year, and no one expects that to happen so soon.
A more realistic yet still aggressive forecast would be for MercadoLibre to reach a $100 billion market cap by 2029. It would be in elite company when it gets there. Amazon (AMZN -0.40%), Walmart (WMT -0.91%), and Costco (COST +0.52%) are among the 42 U.S. exchange-listed companies with trailing net revenue in the 12 figures.
Image source: Getty Images.
The case of 2030
The easiest path is to check in on the Wall Street pros who follow MercadoLibre stock. Many have put out annual projections through the next few years, and the analyst consensus would have MercadoLibre joining the $100 billion club in four years. Let's start there.
Here are the next few years of Wall Street revenue projections for the company that dominates Latin America in e-commerce, digital payments, and more:
- 2026: $41.6 billion
- 2027: $53.1 billion
- 2028: $65.9 billion
- 2029: $84.8 billion
- 2030: $102.2 billion
Analysts barely see MercadoLibre's trailing revenue reach the 12-figure mark until 2030. Zoom in closer, and it's not expected to get there until the final quarter of the year.
MercadoLibre won't report those results until February 2031. That's almost five years from now, but I don't mind being a little more aggressive with my forecast.
NASDAQ: MELI
Key Data Points
We're gonna party like it's 2029
Looking over the past few financial updates, two divergent trends emerge. First, MercadoLibre has fallen short of Wall Street profit targets in three of the past four quarters. This obviously isn't a good trend, but there are two good reasons for the bottom-line misses.
A big push into offering loans and credit cards in Latin America has led MercadoLibre to record initial loan loss provisions. The other setback is that with competitive pressures heating up in Brazil, MercadoLibre has had to become more promotional in this key market. It has had to lower its minimum for free shipping to fend off rivals doing the same thing, and fulfilling small orders with subsidized shipping will eat into near-term profitability.
The good news is that the other trend finds MercadoLibre beating Wall Street revenue targets in all four of its latest reports. The $10.2 billion in revenue it generated in last week's second-quarter report is 5% ahead of the $9.7 billion expected by analysts.
Now let's revisit the market's revenue projections through 2030. Analysts see revenue soaring 44% this year, but the next several years call for top-line gains of 28%, 24%, 29%, and 21%, respectively. Put another way, analysts see today's MeradoLibre's revenue growth cut in half in four years. Businesses decelerate as they mature, but this overlooks how MercadoLibre has prioritized sustaining and expanding market share over margin growth in recent years.
Back to the future
Amazon, Walmart, and Costco joined the $100 billion annual revenue growth club in 2015, 1997, and 2013, respectively. MercadoLibre is going a lot faster than all three of these companies, but it's not why I brought up that all three companies hit $100 billion in trailing revenue more than a decade ago.
Walmart's revenue growth is accelerating this year. Amazon and Costco are on back-to-back years of stepping on the accelerator when it comes to top-line increases. Maturing companies don't just slow-roll to zero. They innovate and find new revenue streams.
This is exactly what MercadoLibre has done. It has an impressive streak of 30 consecutive quarters with revenue growth above 30%, and it's often been well above that waterline. Its latest quarter delivered net revenue rising 50%, its strongest growth in four years. On an annual basis, MercadoLibre has topped 37.5% growth in each of the last five years, and -- like Amazon and Costco -- revenue is accelerating nicely for the second consecutive year right now.
Using that 37.5% as a baseline, MercadoLibre would hit $108 billion by 2029 (during the third quarter, if you want to fine-tune the forecast). A lot can happen between now and then, and as an optimist, I welcome that. With MercadoLibre shares trading lower this year, it has historically paid off to be bullish when sentiment for the stock is bearish.
