4. MercadoLibre, Inc. (NASDAQ:MELI)
Number of Hedge Fund Holders: 79
MercadoLibre, Inc. (NASDAQ:MELI) is a Latin American e-commerce giant with over 100 million unique users across 18 countries as of the second quarter of 2024. The company is headquartered in Uruguay. Apart from e-commerce, the company also has significant fintech operations and provides logistics, retail ads, online storefront solutions, and classified services.
On August 1, MercadoLibre (NASDAQ:MELI) posted stronger-than-expected results for the second quarter. It reported $5.07 billion in revenues, up over 41%, and its net income increased by over 100% year-over-year to $531 million. On a per-share basis, the company’s earnings of $10.48 topped analyst estimates by $2.
MercadoLibre’s (NASDAQ:MELI) e-commerce platform has seen significant traction, particularly in Brazil, where gross merchandise value (GMV) grew by 36%, and in Mexico, where the company continues to gain market share. In Mexico, its revenue saw a 66% growth.
MercadoLibre’s (NASDAQ:MELI) fintech arm, Mercado Pago surpassed 50 million monthly active users for the first time, which highlights strong user engagement and a thriving credit business that saw total payment volume (TPV) grow 3x year-over-year.
MercadoLibre’s (NASDAQ:MELI) introduction of innovative logistics solutions, such as the launch of a U.S.-based fulfillment center and the deployment of robotics in Brazil, further strengthened the company’s competitive edge by improving efficiency and expanding service offerings.
On August 8, Bank of America raised its price target for MercadoLibre (NASDAQ:MELI) from $2,000 to $2,250 while maintaining a Buy rating on the stock. This adjustment came in response to stronger-than-expected GMV in the second quarter, which outperformed market expectations.
The analyst highlighted that MercadoLibre’s (NASDAQ:MELI) ability to consolidate its market position, improve logistics and shipping, implement strategic pricing, and introduce multiple user experience improvements is driving this elevated GMV growth. As a result, the firm revised its long-term GMV compound annual growth from 16% to 21%, reflecting confidence in the company’s sustained growth trajectory.
In Q1 of 2024, MercadoLibre’s (NASDAQ:MELI) shares were held by 79 hedge funds, valued at $4.74 billion. This makes the company the fourth best consumer discretionary stock on our list. As of Q1, Rajiv Jain’s GQG Partners increased its stake by 443% in the quarter to 794,782 shares worth $1.2 billion, making it the most significant shareholder of the company.
Lakehouse Capital stated the following regarding MercadoLibre, Inc. (NASDAQ:MELI) in its May 2024 investor letter:
“The Fund’s largest position, Buenos Aires based e-commerce leader MercadoLibre, Inc. (NASDAQ:MELI), reported a robust result that once again came in ahead of analyst expectations. Net revenue grew 30% year-on-year in U.S. dollar terms to US$4.0 billion while operating margins came in at 12.0%, providing a healthy balance of growth and profitability. Its marketplace business proved resilient, with strength in Brazil and Mexico more than enough to offset weakness in Argentina, which contacted by roughly a third due to weak macroeconomic conditions exacerbated by the 50%-plus devaluation of the Argentine Peso in December 2023. Whilst the economic situation in Argentia remains severe, we are comfortable with the risk as not only has management proved very adept at handling the challenges to date, but post the devaluation, the risk is meaningfully reduced as Argentina now only contributes 13% of the company’s total operating income. Overall, gross merchandise value still grew at 20% year-on-year to $11.4 billion and we continue to see significant opportunities ahead given the relatively nascent penetration of e-commerce in the region.”
