The unstoppable rise of Mercado Libre, the ‘Latin American Shopify’

newsNew York – MercadoLibre (NASDAQ:MELI), also known as the ‘Latin American Spotify’, has come out reinforced after the coronavirus pandemic prompted lockdowns across South and Central America, which has significantly accelerated e-commerce adoption in the region.

In the first quarter, MercadoLibre reported revenue that grew 71 percent year over year in local currencies after generating 84 percent growth in the fourth quarter, according to Nasdaq. Noteworthy, its peers in the e-commerce segment were up by 62 percent collectively. The retailer’s payments division, Mercado Pago, off-platform growth was significant: Total payment volume jumped 140 percent year over year, while the number of transactions rose 146 percent.

MercadoLibre poised for double-digit growth as e-commerce thrives in Latam

Analysts in the industry are forecasting revenue growth of 33 percent for the current year with that figure accelerating to 37 percent next year, though MercadoLibre has consistently defied the odds and exceeded expectations.

It’s worth recalling that MercadoLibre secured a 750 million dollars equity investment from PayPal. This funding has helped MercadoLibre increase its market share. The market expects MercadoLibre’s profits to return in the next quarter or two.

In June, MercadoLibre performed on a strong note as BTIG raised its price target on the stock from 775 to 980 dollars on June, 1.

On a related note, analyst Marvin Fong said that e-commerce adoption in Brazil, MercadoLibre's biggest market, had accelerated by four to five years because e-commerce's share of overall retail sales had climbed from 6 percent at the beginning of the year to 11 percent to 12 percent in April, reported ‘The Motley Fool’.

Shares at the online marketplace soared by 16 percent in June. While the company isn’t currently profitable, its share price has gained 510 percent over five years and 66 percent in the last quarter alone.

Image:MercadoLibre official website,

 

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