5. MercadoLibre, Inc. (NASDAQ:MELI)
Number of Hedge Fund Holders: 84
MercadoLibre, Inc. (NASDAQ:MELI) is an online marketplace headquartered in Uruguay. The company was founded in 1999 and is on track to become the largest e-commerce company in Latin America. Today, MercadoLibre, Inc. (NASDAQ:MELI) is present in 18 countries and has over 65 million buyers and 12 million sellers.
MercadoLibre, Inc. (NASDAQ:MELI) is one of the largest e-commerce companies in Latin America and reported gross merchandise value worth $45 billion in 2023. The company has grown its revenue at a compound annual growth rate of 28% between 2016 and 2023. During the second quarter of 2024, the company generated $12.6 billion in gross merchandise value, up by 20%, and sold nearly 421 million items, up by 29% year-over-year.
Unique active buyers reached 56.6 million during the second quarter of 2024, up from 47.6 million in the second quarter of 2023, the fastest growth since the second quarter of 2021. Brazil contributed most to this trend, with a growth rate of 22% year-over-year. MercadoLibre’s (NASDAQ:MELI) e-commerce infrastructure is stringent, allowing it to facilitate faster deliveries. In 2023, MercadoLibre delivered 1.38 billion items, and 76% of them were delivered within 48 hours in the last quarter of 2023.
Overall, MercadoLibre, Inc. (NASDAQ:MELI) has grown its revenue at a compound annual growth rate of 28% between 2016 and 2023. Its consistent performance and growing customer base are its economic moat. To align with its expansion strategy, the company expects penetration to increase in growth markets such as Latin America, China, the United States, and the United Kingdom.
Lakehouse Capital’s Lakehouse Global Growth Fund 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.”
