While the economic situation in many South American countries remains quite unstable, the local online commerce platform MercadoLibre continues its month-by-month growth. However, it’s a stretch to call it merely “local”, considering South and Central America's status as a robust emerging market. MercadoLibre stocks have already increased by more than 65% since the beginning of the year. This piece explores the insights of analysts into the potential for further growth.
The chart depicting MercadoLibre's stock performance can brighten the day for investors who have the company’s shares in their portfolios. Take a look at the chart below. For comparison, Apple stock price has gained “only” 41% in 2023.
MercadoLibre has demonstrated substantial long-term growth. While it hasn't yet reached the highs of the COVID era, unlike many pandemic darlings, it has not halted its expansion but continued to grow, posting nearly 300% growth over the past five years.
First, we can’t miss MercadoLibre's recent earnings report, which received favorable attention from market participants. The company’s revenue in Q3 2023 beat estimates by 5.3%, reaching $3.76 billion compared to the expected $3.57 billion. Earnings per share also outperformed the forecast, a 21.72% increase from the expected $5.88.
MercadoLibre also boasts several other compelling strengths. This firm is the leading online commerce platform in a giant region with an excellent growth potential. Argentina, Brazil, Mexico, Chile, Uruguay, and several other countries with large populations provide a diversified business landscape.
Additionally, the preference for cash over plastic in some regions leaves room for growth. The number of card users will only grow in the coming years, along with the amount of online transactions, making it hard for the company to ignore this growth potential.
MercadoLibre has also expanded into other areas, such as payment and logistics solutions, broadening its scope and capabilities.
However, there are also notable challenges. The main one is the above-mentioned economic situation in South and Central America. High inflation, coupled with weak economies and world crisis, is not the most fantastic mix you can imagine.
However, this doesn’t prevent analysts from remaining optimistic. The consensus forecast MercadoLibre suggests a 20% increase in the next 12 months, coupled with a “Strong Buy” analysts’ rating.
It's essential to remember that while analyst insights are valuable, your own research and judgment should be trusted, as the market can change rapidly.
