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Shares of Mercado Libre (NASDAQ:MELI) have dropped from their triple digit prices recently. Shares now trade at $84.56, directly in the middle of their 52 week range ($64.18-$103.34). Will Monday's earnings be enough to boost shares once again, or will the pending entry of Amazon (NASDAQ:AMZN) in the region continue to keep this high growth stock down?

Mercado saw fourth quarter revenue increase 20% to $103.8 million. This number fell short of analysts' targeted $105.3 million. Earnings per share came in $0.08 higher than estimates at $0.69. The company saw strong growth across all of its operating segments. Total items sold increased 19.5% to 19.0 million. MercadoPago, the company's online payment service, saw total payments increase 43% to $6.7 million.

In fiscal 2012, Mercado saw total revenue of $373.6 million. The 25% increase in revenue came from strong results in all operating countries:

· Brazil +19%

· Argentina +62%

· Mexico +19%

· Venezuela +43%

· Others +15%

The company reported earnings per share of $2.30 for the fiscal year, beating analysts' target of $2.22. Total revenue did fall short of a predicted $375.9 million.

Mercado is set for a long road of growth. The 13 countries it operates in are all growing in terms of internet penetration. The company laid out some of its growth plans in a 2nd Quarter presentation. In fact, one of the key points of the presentation was a reference to an iceberg. Mercado believes it is "scratching the tip of the iceberg" with:

· 10% of population shopping online

· 1.5% of retail sales online

· 25% of online users registered on Mercado

· 33% of population is online

Mercado continues to diversify itself through new products. The company launched MercadoClics and Active Mercado Shops throughout the year. Mercado now has strong sales in marketplaces, payments, classifieds, and advertising. The company also saw sales in Brazil count for 48% of 2012 revenue. While this number is high for a company dealing with 13 countries, it is a lower percentage than the past couple of years. This showcases the company's smaller reliance on one country, helping to ease investors' fears of an Amazon entry.

Amazon is rumored to be entering all Latin American countries. Brazil is one of the countries where Amazon is hiring to start a cloud based service for customers. Mercado has the edge with its base presence and years of learning how to gain traction in undeveloped markets. Mercado also has the premier payment service in the region. Also, don't forget that Mercado is 19% owned by Ebay (NASDAQ:EBAY), so they would likely help their smaller foreign investment fend off the competition. Amazon would also have to worry about fluctuating currencies, tariffs, political instability, and other downfalls of new foreign territories.

If Amazon does enter Latin America, the threat will be relatively small. The market in Latin America is huge and growing at rapid rates. There is room for multiple players in these countries. Mercado should welcome the competition to some degree, as more internet e-commerce options would likely increase overall internet penetration and demand.

Whether Amazon takes on Mercado head on is a matter of time. In the meantime, investors looking for that international flare should consider entering a long position in Mercado Libre, the e-commerce leader of Latin America. Shares trade at a lofty 31 times this year's expected $2.72 in earnings per share. The company's long term growth plan justifies the high price valuation.

Source: MercadoLibre Has Plenty Of Growth In Latin America Despite Competition From Amazon