MercadoLibre Stock Price Forecast - MELI Shares Rises 39% YoY as Fintech Growth Fuels $2,800 Target

MercadoLibre (NASDAQ:MELI): Fintech Powerhouse Driving Latin America’s Digital Transformation

MercadoLibre (NASDAQ:MELI), often referred to as the Amazon of Latin America, is redefining the digital economy across the region. Trading at $1,951.78 per share, up 2.74%, with a market capitalization near $99 billion, the company continues to balance aggressive growth with strong operational control. Despite short-term margin compression, its core businesses—commerce, fintech, and logistics—demonstrate exceptional scalability and profitability.

Revenue Expansion and Market Penetration Across 18 Countries

In its latest quarter, MercadoLibre (NASDAQ:MELI) reported $7.41 billion in revenue, up 39.5% YoY, marking its 27th consecutive quarter of over 30% growth. Gross Merchandise Volume (GMV) rose 35% YoY to $16.5 billion, underscoring strong demand in Brazil, Mexico, and Argentina, which collectively account for nearly 80% of consolidated revenue. Brazil delivered $4.0 billion, Mexico surged 44.2% YoY to $1.65 billion, and Argentina contributed $1.4 billion despite inflation and FX volatility. The company reached 76.8 million active buyers (+26% YoY), adding 7.8 million new users in the quarter. The average number of items sold per user climbed 11% YoY to 8.3, supported by record conversion and retention rates.

Fintech Momentum: Mercado Pago and Credit Engine Scale Rapidly

Fintech continues to drive MercadoLibre’s growth engine. Mercado Pago revenue surged 48.9% YoY to $2.2 billion, while Total Payment Volume (TPV) reached $71.2 billion (+54% FXN). The platform now exceeds 75 million active users, consolidating its position as the most adopted digital finance ecosystem in Latin America. The company’s credit business expanded 83% YoY to a record $11 billion in loans, primarily in Brazil, Mexico, and Argentina. Non-performing loans remained contained, reflecting disciplined underwriting despite rising funding costs. Net Interest Margin after Losses (NIMAL) contracted by 320 basis points YoY, mainly due to higher financing expenses in Brazil and Argentina, but profitability in mature markets like Brazil has already reached breakeven. The expansion of paycheck deposit services via Mercado Pago is the next structural milestone, expected to cement its position as a full-spectrum fintech ecosystem once Mexican regulatory approvals are secured.

Ecosystem Reinforcement: Logistics, Ads, and Marketplace Integration

MELI’s decision to replace Mercado Shops with Mi Página integrates sellers directly into its core Marketplace, enhancing user engagement and monetization. The Mercado Ads division leverages vast user data for more precise targeting, increasing advertising ROI for sellers. Logistics operations under Mercado Envios continue to scale, with fulfillment capacity expanding 41% YoY, leading to an 8% QoQ reduction in shipping costs after lowering the free shipping threshold in Brazil. The logistics network now rivals that of major U.S. peers in efficiency and density. The new partnership with Casas Bahia introduces large appliances and B2B categories, expanding the company’s reach into higher-value goods and corporate clients.

Profitability Compression vs. Structural Growth

Operating income grew 30% YoY to $724 million, with a margin of 9.8%, down from 12.2% in the previous quarter due to heavy investment in free shipping and marketing. Net income rose 6.05% YoY to $421 million, translating to EPS of $8.32, while EBITDA increased 30.7% YoY to $933 million. Despite temporary margin contraction, these figures reflect long-term operational leverage. Operating expenses of $2.49 billion (+32% YoY) show disciplined cost expansion relative to revenue growth. Cash from operations jumped 84.9% YoY to $2.96 billion, highlighting robust internal liquidity, while adjusted free cash flow remained positive at $206 million, even after $375 million in CapEx and significant credit portfolio expansion. With $4.09 billion in cash and a net debt-to-EBITDA ratio of 1.19x, MELI’s balance sheet remains well-positioned to fund growth without external financing.

Valuation Metrics and Comparative Analysis

MELI trades at a 47.6x forward P/E and 27.2x EV/EBITDA, higher than peers like Amazon (NASDAQ:AMZN) at 31.5x and Sea Limited (NYSE:SE) at 41x. This premium is warranted by MELI’s superior ROE of 40.6%, EBITDA margin of 14.7%, and forecasted EPS CAGR of 32% over the next five years. Revenue is projected to grow 36% in 2025, 28% in 2026, and 23% in 2027, supported by e-commerce expansion and fintech penetration. EPS is expected to rise from $41 to $86 within two years, cutting the effective forward multiple to 24x. A DCF valuation places intrinsic equity value near $142.3 billion, implying a target price of $2,806 per share, about 36% upside from current levels. Even under conservative assumptions, a $2,200 fair value remains reasonable, confirming MELI’s resilience to multiple compression.

Macro and Regional Risks

Macroeconomic instability in Argentina remains a persistent risk due to currency depreciation and inflation, though its share of consolidated EBITDA is below 15%, reducing exposure. Brazil’s competitive environment—driven by Shopee, Temu, and Amazon—has forced MELI to sustain free shipping and marketing intensity, but its superior logistics infrastructure provides a decisive moat. Regulatory risk also lingers, with fintech capital requirements tightening in key markets like Mexico and Brazil. Rising global interest rates could pressure valuations; a 100-basis-point increase could reduce fair value by roughly 10%. However, MELI’s $2B+ annual operating cash flow and low leverage mitigate these shocks effectively.

Strategic Direction Toward 2026: Scale, Efficiency, and Profit Conversion

CFO Martín de los Santos emphasized that MELI’s next growth phase is centered on profit conversion, logistics efficiency, and fintech scalability. With incremental margins improving and ecosystem synergies deepening, MELI is moving from a growth-centric narrative to one of efficient compounding. Fintech integration and e-commerce saturation across the region are driving operational predictability—a key factor for global re-rating. The company’s structural control over payments, logistics, and data gives it defensible dominance that few regional competitors can replicate.

Verdict: NASDAQ:MELI – Strong Buy

NASDAQ:MELI remains a Strong Buy, supported by unmatched regional dominance, balanced growth, and robust financials. With 36% projected upside to $2,800, MELI is positioned as Latin America’s premier fintech and e-commerce hybrid. Its $7.4 billion revenue, $421 million profit, and expanding fintech base reinforce its structural leadership. Insider activity can be viewed at MELI Insider Transactions. MercadoLibre’s unique blend of fintech innovation, logistics scale, and e-commerce strength underpins its trajectory as the region’s most powerful digital conglomerate.

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