MercadoLibre Stock Down 38% From Peak as Profits Fall Amid Brazil Competition

Earnings

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Summary · why it matters

MercadoLibre shares have fallen 38% from their all-time high as first-quarter operating income dropped to $611 million from $763 million a year earlier, despite a 49% jump in revenue. The profit decline stems from increased competition in Brazil, its largest market, from Sea Limited's Shopee, PDD Holdings' Temu, and Amazon, prompting MercadoLibre to lower its free shipping threshold to defend market share. The company is also investing in cross-border trade with merchants in China and the U.S., opening its first fulfillment center in China, while its credit portfolio grew 87% to $14.6 billion and it issued 2.7 million MercadoPago credit cards. Management views the margin compression as temporary, prioritizing long-term growth over short-term profits, and notes that the average Latin American makes just seven online purchases a year compared to 41 for the average American, signaling a long runway for e-commerce expansion.