7. MercadoLibre Inc. (NASDAQ:MELI)
Number of Hedge Fund Holders: 87
5-Year Revenue CAGR: 55.26%
Upside Potential as of January 15: 27.60%
MercadoLibre Inc. (NASDAQ:MELI) is an e-commerce platform that operates in 18 countries with a strong presence in Brazil, Mexico, and Argentina. It has established itself as a dominant force through its extensive logistics network and the development of Mercado Pago, which is a digital payments platform that has evolved into a Fintech segment.
The company delivered exceptional growth in Q3 2024. In Brazil, GMV (gross merchandise value) surged 34% year-over-year, while Mexico saw a 27% increase. In Argentina, the platform surpassed a milestone, processing over a record 60 million items sold. This was fueled by a record 7 million new buyers. This highlights the untapped potential in the Latin American e-commerce market, where online penetration remains relatively low at only 15%.
Strategic investments across commerce and fintech platforms have significantly improved delivery speeds and reliability. The expansion of the logistics network, with the addition of six new fulfillment centers (five in Brazil and one in Mexico), further enhanced this improvement. These translated into revenue growth of 35% year-over-year.
The 3 most recent analyst ratings were released by JP Morgan, Wedbush, and Citigroup on January 8 and January 6 in 2025, and November 26 in 2024, respectively. With an average price target of $2166.67 between JP Morgan, Wedbush, and Citigroup, there’s an implied 17.51% upside for the company. MercadoLibre Inc.’s (NASDAQ:MELI) e-commerce and fintech businesses are driving strong growth for it, with a leading brand and attractive valuation despite potential future competition. Infuse Asset Management stated the following regarding the company in its Q4 2024 investor letter:
“Staying in Latin America, MercadoLibre, Inc. (NASDAQ:MELI) continues to spin its commerce/payments flywheel. While it started out as an e-commerce platform, its fintech business is now much larger. When management pulled back on giving out loans for fear of a worsening economy, overall revenue growth picked up with accelerating GMV in the core e-commerce business. Then, the finance business segment started to reaccelerate when the team realized nonperforming loan ratios were lowered than expected. But the segments aren’t fully independent. There is a beautiful synergy as on-platform payments lower the friction for the commerce business and faster delivery times lead to more orders and therefore more payments. Meanwhile, MELI also offers a plethora of tools for merchants in both commerce and finance. The company is still growing more than 30% and it has a leading brand in Latin America. Someday Nu and MercadoLibre will bump up against each other but I think we still have at least 5 years before they start competing head-on. For less than 30x forward earnings, the valuation is still reasonable for the company.”