Insights

Why MercadoLibre Stock Jumped on Friday

What happened
Even as the market turned sharply lower on Friday, shares of MercadoLibre (NASDAQ: MELI) charged higher, gaining as much as 8%. As of 2 p.m. ET, the stock was still up 3.7%.
The catalyst that sent the online retail and fintech specialist higher was its quarterly financial report, which showed its growth trajectory was intact and the results were far better than expected.
So what
For the first quarter, MercadoLibre generated revenue of $2.2 billion, up an impressive 67% year over year in local currencies. The results were driven by e-commerce revenue that grew 44% and fintech revenue that surged 113%. 
Image source: Getty Images.

Operating income of $139 million climbed 53%, resulting in record quarterly net income of $65 million. Earnings per share came in at $1.30, compared with a loss per share of $0.68 this time last year. 
To put those numbers in context, analysts’ consensus estimates were calling for revenue of $2 billion and earnings per share of $1.17. 
MercadoLibre delivered on every metric that matters. Gross merchandise volume (the total value of products sold on its digital retail platform) was $7.7 billion, up 32% year over year, while total payment volume (TPV) of $25.3 billion climbed 81%. This was fueled by off-platform TPV that surged 139% to $17.3 billion and 1.1 billion total payment transactions, an increase of 73%. 
Now what
MercadoLibre doesn’t provide quarterly guidance, preferring to focus on the long term. That said, there’s plenty of reason to believe the company’s robust growth will continue. On the earnings conference call, CFO Pedro Arnt noted that MercadoLibre had achieved record total revenue, improved gross margins, and record net income — all on top of last year’s pandemic-fueled results.
Investors have been inundated with headlines that suggest growth among e-commerce and payments businesses is slowing — but not all businesses are created equal. Furthermore, while MercadoLibre’s stock still isn’t cheap when measured using traditional valuation metrics, its current price-to-sales ratio of less than 7 is at its lowest point in more than six years.
MercadoLibre stock has been dragged lower by the recent downturn, with shares currently down more than 50% off recent highs. Given the company’s blockbuster results, MercadoLibre stock is a buy — particularly at this price.
Danny Vena has positions in MercadoLibre. The Motley Fool has positions in and recommends MercadoLibre. The Motley Fool has a disclosure policy. –

What happened

Even as the market turned sharply lower on Friday, shares of MercadoLibre (NASDAQ: MELI) charged higher, gaining as much as 8%. As of 2 p.m. ET, the stock was still up 3.7%.

The catalyst that sent the online retail and fintech specialist higher was its quarterly financial report, which showed its growth trajectory was intact and the results were far better than expected.

So what

For the first quarter, MercadoLibre generated revenue of $2.2 billion, up an impressive 67% year over year in local currencies. The results were driven by e-commerce revenue that grew 44% and fintech revenue that surged 113%. 

Image source: Getty Images.

Operating income of $139 million climbed 53%, resulting in record quarterly net income of $65 million. Earnings per share came in at $1.30, compared with a loss per share of $0.68 this time last year. 

To put those numbers in context, analysts’ consensus estimates were calling for revenue of $2 billion and earnings per share of $1.17. 

MercadoLibre delivered on every metric that matters. Gross merchandise volume (the total value of products sold on its digital retail platform) was $7.7 billion, up 32% year over year, while total payment volume (TPV) of $25.3 billion climbed 81%. This was fueled by off-platform TPV that surged 139% to $17.3 billion and 1.1 billion total payment transactions, an increase of 73%. 

Now what

MercadoLibre doesn’t provide quarterly guidance, preferring to focus on the long term. That said, there’s plenty of reason to believe the company’s robust growth will continue. On the earnings conference call, CFO Pedro Arnt noted that MercadoLibre had achieved record total revenue, improved gross margins, and record net income — all on top of last year’s pandemic-fueled results.

Investors have been inundated with headlines that suggest growth among e-commerce and payments businesses is slowing — but not all businesses are created equal. Furthermore, while MercadoLibre’s stock still isn’t cheap when measured using traditional valuation metrics, its current price-to-sales ratio of less than 7 is at its lowest point in more than six years.

MercadoLibre stock has been dragged lower by the recent downturn, with shares currently down more than 50% off recent highs. Given the company’s blockbuster results, MercadoLibre stock is a buy — particularly at this price.

Danny Vena has positions in MercadoLibre. The Motley Fool has positions in and recommends MercadoLibre. The Motley Fool has a disclosure policy.

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