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What's happening: Shares of MercadoLibre (NASDAQ:MELI), an e-commerce company operating in 13 Latin American countries, sank on Thursday after the company reported mixed second-quarter results. Revenue came in at $154.3 million, up 17% year over year and about $7 million higher than analysts were expecting. However, the company missed big on earnings, reporting EPS of $0.44, down significantly year over year and $0.24 shy of the average analyst estimate. Down as much as 10% at market open, by noon Thursday the stock was down about 7.5%.

Why it's happening: The strong U.S. dollar is having a severe negative effect on MercadoLibre's results. Revenue increased by 88.3% year over year in local currencies, but this was reduced to just 17% growth in U.S. dollars. Venezuela was particularly challenging in regards to currency; excluding Venezuela, revenue would have grown by 28.9% year over year in U.S. dollars.

Despite this, the company still grew revenue faster than analysts were expecting. Earnings, though, were another story. Excluding a one-time charge the company took during the second quarter of 2014 related to Venezuela, adjusted net income declined in U.S. dollars by 38.7% year over year. Gross margin declined to 67.4%, down from 72.4% during the same period last year, and operating expenses, excluding the one-time charge, grew far faster than revenue, jumping 33.7% year over year in U.S. dollars.

MercadoLibre grew extremely fast in local currencies, but the strong U.S. dollar is wreaking havoc on the company's top and bottom lines. A big earnings miss sent the stock tumbling, but investors will need to wait for these currency issues to subside before getting a clear picture of the company's performance.

Timothy Green has no position in any stocks mentioned. The Motley Fool recommends and owns shares of MercadoLibre. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.