In this article, we discuss 5 rebounding tech stocks to watch. If you want to see more stocks in this list, click “Silliness is Back”: Michael Burry’s Latest Comments and 10 Rebounding Tech Stocks to Watch.
5. MercadoLibre, Inc. (NASDAQ:MELI)
Number of Hedge Fund Holders: 63
5-Day Percentage Increase in Share Price as of August 5: 26.98%
MercadoLibre, Inc. (NASDAQ:MELI) offers online commerce platforms in Latin America, operating through Mercado Libre Marketplace, Mercado Pago FinTech, Mercado Fondo, Mercado Envios, Mercado Libre Classifieds, Mercado Libre Ads, and Mercado Shops segments. The stock has shot up about 27% in the last 5 days.
On August 3, the company posted Q2 GAAP EPS of $2.43, beating market estimates by $0.79. MercadoLibre, Inc. (NASDAQ:MELI)’s revenue climbed 52.4% year-over-year to $2.59 billion, outperforming the Wall Street consensus by $80 million. The company’s total payment volume and gross payment volume increased by 83.9% and 26.2% year-over-year, respectively.
Barclays analyst Trevor Young maintained an ‘Overweight’ rating on MercadoLibre, Inc. (NASDAQ:MELI) on August 4 and lowered the price target on the shares to $1,250 from $1,500. The company’s gross merchandise volume in Q2 was approximately in-line and net revenue exceeded consensus across key markets, the analyst told investors in a research note.
According to Insider Monkey’s Q1 data, 63 hedge funds were bullish on MercadoLibre, Inc. (NASDAQ:MELI), compared to 74 funds in the prior quarter. David Blood and Al Gore’s Generation Investment Management is a prominent stakeholder of the company, with 441,529 shares worth $525 million.
Here is what Mercator International Opportunity Fund had to say about MercadoLibre, Inc. (NASDAQ:MELI) in its Q4 2021 investor letter:
“Disruptive technology also tends to create a new breed of portfolio managers. These often younger investors have better insight into the way the world is changing and get on the bandwagon early. Rapid success makes them famous, which allows them to attract huge amounts of money. As these funds grow, new money is added to existing positions. With more money chasing the same fashionable stocks, lofty prices get loftier. The better the performance, the more money flows into the funds and the higher their stocks go.
One day this dynamic inevitably comes to an end. The virtuous cycle suddenly turns vicious. As the popular technology funds get redemptions, their managers are forced to sell. Forced sales bring down stock prices which only results in more redemptions. Fundamentals no longer matter and the baby gets thrown out with the bathwater.
MercadoLibre, Inc. (NASDAQ:MELI; 1.75%) is a good example of how this panic-like behavior creates investment opportunities for level-headed investors. For years, this Latin American eCommerce behemoth was priced for perfection, which they managed to deliver. At the end of last summer, MELI peaked at around $2,000. Then, just like that, with no change in its business prospects, the stock price lost more than 40%. The sentiment changed on a dime. That’s when Mercator began accumulating a position after watching it for many years.”
