MercadoLibre (MELI) Eyes $2,000 Rebound After Argentina Surge and Fintech Boom

MercadoLibre (NASDAQ:MELI) Powers Through CEO Shift, Argentina Surge, and Currency Tailwinds

Growth Machine Unfazed by Leadership Change at NASDAQ:MELI

MercadoLibre (NASDAQ:MELI) proved once again that execution beats speculation. The recent CEO transition from Marcos Galperin to Ariel Szarfsztejn barely slowed momentum. Szarfsztejn, a MELI veteran since 2017, has climbed through every operational rank—from logistics head to EVP of commerce. This transition isn’t disruption—it’s succession planning done right. Markets initially reacted with caution, but the stock's operational data suggests that core execution remains solid.

Commerce and Fintech Expand Despite Margin Drag

Marketplace GMV reached $13.3 billion, a 17% YoY increase, while Total Payment Volume (TPV) surged to $58.3 billion, up 43% YoY. MELI’s fintech arm, particularly in Argentina, drove a 125% YoY USD-based revenue boost—adjusted to 184% FX-neutral growth. Argentina’s 45 million-strong population is becoming one of MELI’s highest-yielding consumer bases.

The company’s Q1 2025 net revenue hit $5.9 billion, rising 37% YoY in USD terms, and 64% FX-neutral, with operating income at $763 million, yielding a 12.9% margin. Net income came in at $494 million, with EPS rising 82% YoY. While the 8.3% income margin marks a dip, it reflects MELI’s rapid reinvestment cycle, especially its $256 million CapEx into logistics and $770 million injected into credit operations.

Argentina Becomes MELI’s Growth Engine

Argentina delivered blowout numbers. Commerce and fintech revenues more than doubled, and MELI committed to a record $2.6 billion investment there by 2025—a 53% increase YoY. This capital will flow into logistics, tech infrastructure, and financial services. More importantly, the move solidifies MELI’s moat in a rebounding economy.

The new Meli+ subscription ties users in with bundled perks like Disney+ Standard, free shipping, and interest-free installments. In Brazil, MELI has integrated PIX, the national real-time payment system, allowing seamless cross-border transactions. In parallel, Mercado Play launched on smart TVs, offering ad-supported content and unlocking a new digital revenue stream.

Margins Tighten as Scale Accelerates

Despite margin compression, the big picture shows disciplined reinvestment. Operating cash flow stood at $1.03 billion, while adjusted free cash flow was -$10 million—a temporary dip tied to expansion, not operational strain.

Fintech credit exposure hit $7.8 billion, growing 75% YoY, with NIMAL (Net Interest Margin After Losses) at 22.7% and delinquencies well-managed at 8.2% (15–90 days). In Brazil, card default rates hit record lows. These are robust metrics for a fintech that’s scaling hard in volatile markets.

Valuation Remains High—But Deserved

P/E forward remains elevated at 51.9x, and EV/EBITDA forward sits at 29.6x—over 200% above sector average. But this is not excess without reason. MELI’s 28.8% CAGR in EPS over 3–5 years, combined with an ROE of 49.1%, underlines long-term scalability. Compare that to the consumer discretionary sector’s average ROE of ~12%, and MELI’s premium begins to look more justified.

Valuation multiples have actually compressed versus MELI’s 5-year average. Price-to-sales forward is now 4.82x, below the 5Y average of 8.06x, and P/B has declined from 49.7x to 19.1x. This suggests the current pullback—while partly tied to CEO transition sentiment—may represent a valuation window.

Verdict: MELI is a Buy on Weakness

MELI offers a rare trifecta: scale, growth, and regional dominance. The fintech-latency risks are dwarfed by earnings power, monetization potential, and ecosystem entrenchment. While NASDAQ:MELI remains expensive on face metrics, its fundamentals and execution quality justify it. The stock’s recent retreat toward the $2,000 level—often near its 50-day EMA—may offer an attractive re-entry.

Rating: Buy

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