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Rick Munarriz, The Motley Fool
Wed, July 1, 2026 astatine 8:27 AM CDT 4 min read
In a twelvemonth erstwhile tech stocks are rallying, MercadoLibre (NASDAQ: MELI) is simply a laggard. Latin America's person successful e-commerce, payments, logistics, and different fintech offerings is trading 16% little successful 2026. There are immoderate bully reasons for MercadoLibre's pullback successful caller months. The headwinds are real. However, don't slumber connected the tailwinds.
The Latin American bellwether is increasing astatine an awesome pace, and immoderate of the near-term challenges that are squeezing margins could beryllium temporary. Let's spell implicit the bad, and the good, to spot whether this is simply a dip worthy buying oregon the commencement of much symptom to come.
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First up, the headwinds
There person been plentifulness of ups and downs for MercadoLibre's stock, and the latest downturn is the 17% driblet it experienced implicit the six trading days pursuing the company's disappointing first-quarter report. MercadoLibre turned successful a beardown 4th of top-line maturation -- and we'll get to that soon -- but it was a dud connected the bottommost line. MercadoLibre has fallen abbreviated of Wall Street's nett targets successful 3 of its past 4 quarters.
Two things are weighing connected MercadoLibre's profitability. The archetypal is the cutthroat quality of Brazil's online retail market. Overseas competitors are consenting to incur losses to found a beingness successful a portion that's inactive successful its aboriginal stages of integer development. One fashionable lever to thrust income is to slash the minimum bid size for escaped delivery, and MercadoLibre has had to bash conscionable that to stay the apical canine connected its location turf.
The different large origin weighing connected MercadoLibre's bottommost enactment is the popularity of its indebtedness products. MercadoLibre's recognition portfolio has jumped 87% implicit the past year. Beyond expanding MercadoLibre's wide hazard profile, initiating loans entails an accounting deed for imaginable nonaccomplishment provisions.
The nonaccomplishment provisions and shrinking e-commerce borderline successful Brazil are starring analysts to whittle down their nett projections. In the past 3 months alone, Wall Street estimates person declined by 28% for this twelvemonth and 25% for 2027.
Tailwinds, for the triumph
You can't contradict that MercadoLibre is simply a maturation stock. Revenue soared 49% (or 46% connected a foreign-exchange neutral basis) successful the archetypal 4th of this year. Its Mercado Pago outgo level processed $87.2 cardinal successful transactions during the quarter, a 50% increase. Its flagship e-commerce concern is serving 84.1 cardinal progressive buyers, a 26% summation implicit the past year. The beingness of bare contention isn't eating into MercadoLibre's engagement, arsenic gross merchandise measurement spiked 42% for the quarter.
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