MercadoLibre is outperforming industry, facing margin pressure and strong competition

From Nasdaq: 2025-06-18 12:08:00

1. MercadoLibre (MELI) shares have surged 40% YTD, outperforming the Retail-Wholesale sector and Internet-Commerce industry. The company is capitalizing on the growing e-commerce market in Latin America and seeing record brand preference scores in key markets. Fintech arm Mercado Pago boasts 64 million active users and 31% year-over-year growth.
2. Despite strong growth, MercadoLibre faces margin pressure in Brazil and Mexico due to heavy investments in logistics and credit card expansion. The company’s supermarket category is flourishing, with a 65% increase in items sold. Earnings estimate revisions show a downward trend, with a 0.35% decrease in 2025 earnings.
3. MELI stock is considered overvalued compared to the industry, with a high Price/Sales ratio and a Value Score of D. Intense competition from global giants like Amazon, Walmart, and Alibaba poses a threat to MercadoLibre’s market position. The stock is a hold for now, given short-term challenges and valuation concerns.
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5. MercadoLibre remains a dominant player in Latin American e-commerce and fintech markets, but faces challenges from margin pressure and fierce competition. With a Zacks Rank #3 (Hold), the stock may not offer the best risk-reward balance at current levels. Investors should hold off on buying or selling MELI shares for now.

Read more at Nasdaq: MercadoLibre Outperforms Industry YTD: Buy, Sell or Hold the Stock?