MercadoLibre, Inc. (MELI): A Bull Case Theory
We came across a bullish thesis on MercadoLibre, Inc. on Compounding Your Wealth’s Substack by Sergey. In this article, we will summarize the bulls’ thesis on MELI. MercadoLibre, Inc.'s share was trading at $2,373.89 as of July 31st. MELI’s trailing and forward P/E were 58.40 and 45.87, respectively according to Yahoo Finance.
A customer using their phone to access an online commerce platform.
MercadoLibre (MELI) stands as Latin America’s dominant e-commerce and fintech platform, delivering 37% year-over-year revenue growth to $5.9 billion in Q1 2025, with $494 million in net income. Its deeply integrated ecosystem—spanning e-commerce, digital payments, logistics, and credit—creates powerful network effects across 18 countries. With 66.6 million unique marketplace buyers and 64 million monthly fintech users, MELI processes $58 billion in TPV and shipped over 1.2 billion items in 2024, underscoring its scale advantage.
Its dual-segment structure—Commerce (56% of revenue) and Fintech (44%)—continues to deliver strong growth, with the Fintech segment outpacing overall revenue. The Commerce segment saw 32% YoY growth, while GMV rose 17% YoY and the take rate improved to 25%, signaling rising monetization. Meanwhile, Fintech revenue grew 43% YoY, supported by robust user growth and stable take rates. MELI’s proprietary logistics network and MELI Air reinforce its moat, alongside strong brand equity—ranked 50th globally with a $49.8B brand value.
Its credit portfolio grew 75% YoY to $7.8 billion, with stable NPL trends, and selective tightening toward higher-quality borrowers. Argentina’s resurgence, now contributing 23% of revenue with 125% YoY growth, affirms MELI’s strategic pivot toward the region. Despite macro risks, MELI’s operating margins expanded and its balance sheet remains solid, with $9.6B in cash exceeding total debt. Stock-based compensation is just 2% of revenue, and dilution is minimal. Trading at a Forward EV/Sales of 4.3 and a PEG ratio of approximately 1, MELI appears undervalued relative to its 30%+ growth. The synergy between fintech and commerce, coupled with scale, brand, and network advantages, positions MELI as a high-conviction long-term compounder.
Previously, we covered a bullish thesis on MercadoLibre, Inc. (MELI) by Daan | InvestInsights in May 2025, which highlighted its strong e-commerce and fintech growth in Latin America. The stock has depreciated by ~8% since our coverage, as the valuation has compressed. The thesis still stands. Sergey shares a similar view but emphasizes its segment margins and valuation-driven upside.
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