Insights

Why MercadoLibre Stock Was Down 13% Today

What happened
MercadoLibre (NASDAQ: MELI) shareholders lost ground to the market on Monday, with the stock dropping 13% by 1:30 p.m. ET compared to a 2% slump in the S&P 500. The decline pushed the Latin American e-commerce giant deeper into negative territory so far in 2022, down about 40%.
The slump came as investors’ worries grew about slowing demand for e-commerce.
Image source: Getty Images.

So what
MercadoLibre didn’t announce any new operating updates. In fact, shares rose late last week in response to a solid earnings report. But they were down for the full month of April.
The key factor driving its stock lower last month, and today, seems to be waning investor interest in growth stocks. The tech-dominant Nasdaq index dove 13% last month and was down by nearly 4% by early afternoon trading on Monday.
Investors continue to seek the relative safety of dividend stocks and consumer staples giants as they worry about a potential recession ahead. 
Now what
MercadoLibre gave no indication of a slump in its early May update, though. “We drove sustained growth during the fourth quarter,” executives said as they cited a 67% sales spike. Revenue gains will become tougher to achieve through the rest of 2022, and management noted rising interest rates and inflation as key risks going forward.
The good news is the business is making solid progress at building out its market-share lead in e-commerce and in the fintech world. And MercadoLibre is profitable today, unlike many of the growth stocks that have been selling off lately.
Still, shares are likely to remain volatile on any spike in worries about a potential recession looming. Such slumps often will be more pronounced with MercadoLibre’s stock, which is seen as riskier than peers like Amazon due to its international focus and smaller sales footprint.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Demitri Kalogeropoulos has positions in Amazon. The Motley Fool has positions in and recommends Amazon and MercadoLibre. The Motley Fool has a disclosure policy. –

What happened

MercadoLibre (NASDAQ: MELI) shareholders lost ground to the market on Monday, with the stock dropping 13% by 1:30 p.m. ET compared to a 2% slump in the S&P 500. The decline pushed the Latin American e-commerce giant deeper into negative territory so far in 2022, down about 40%.

The slump came as investors’ worries grew about slowing demand for e-commerce.

Image source: Getty Images.

So what

MercadoLibre didn’t announce any new operating updates. In fact, shares rose late last week in response to a solid earnings report. But they were down for the full month of April.

The key factor driving its stock lower last month, and today, seems to be waning investor interest in growth stocks. The tech-dominant Nasdaq index dove 13% last month and was down by nearly 4% by early afternoon trading on Monday.

Investors continue to seek the relative safety of dividend stocks and consumer staples giants as they worry about a potential recession ahead. 

Now what

MercadoLibre gave no indication of a slump in its early May update, though. “We drove sustained growth during the fourth quarter,” executives said as they cited a 67% sales spike. Revenue gains will become tougher to achieve through the rest of 2022, and management noted rising interest rates and inflation as key risks going forward.

The good news is the business is making solid progress at building out its market-share lead in e-commerce and in the fintech world. And MercadoLibre is profitable today, unlike many of the growth stocks that have been selling off lately.

Still, shares are likely to remain volatile on any spike in worries about a potential recession looming. Such slumps often will be more pronounced with MercadoLibre’s stock, which is seen as riskier than peers like Amazon due to its international focus and smaller sales footprint.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Demitri Kalogeropoulos has positions in Amazon. The Motley Fool has positions in and recommends Amazon and MercadoLibre. The Motley Fool has a disclosure policy.

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