Timothy Pereira

MercadoLibre: Rules of the Game

Mercadolibre says this in their S-1 filing from January: "In November of 2005, we acquired certain operations of a regional competitor in online trading, DeRemate.com Inc., including all of its operations in Brazil, Colombia, Ecuador, Mexico, Peru, Uruguay and Venezuela and the majority of shares of its subsidiaries (except for its Argentine and Chilean subsidiaries, which continue to operate under the control of certain previous stockholders of DeRemate.com Inc.), for an aggregate purchase price of $12.1 million, net of cash and cash equivalents acquired. This acquisition increased our user base by approximately 1.3 million confirmed registered users and solidified our market leadership position in Brazil, Mexico, Venezuela, Colombia, Peru, and Uruguay."

MercadoLibre: Rules of the Game

Just to be clear, here is an example of one of the sites on deremate.com:

www.deremate.com.mx/

Do you notice the Mercadolibre logo at the top?

MercadoLibre: Rules of the Game

That's fine, but when someone points out a mistake in my articles I am happy because it's much more important to get the facts right than to pretend to be omniscient.

MercadoLibre: Rules of the Game

Perhaps you should visit the sites of Mercadolibre's "competition" before you tell your readers to plug deremate.com into Alexa to get an example of how much competition Mercadolibre has. You also claim in your comment that the old owners under dereto still use "all the deremate web addresses". This is flatly wrong. Fully 10 of the 12 links from that page are now owned by Mercadolibre.

Calculating MercadoLibre's Q4 EPS

It turns out my analysis was wrong (as pointed out by a commenter on my blog, Brad). Approximately one million dollars in expenses from Q3 is not recurring because it was related to the exercising of warrants and I wrongly thought this was a recurring expense. Adding this change to my calculations, Mercadolibre should earn at least 0.09 per share in Q4.

MercadoLibre Inc.'s Weighted Average Shares Fiasco

Thanks for the tip. I'm quite ignorant regarding options and I try to only invest in what I feel I really understand but you must've made a pretty penny lately with that strategy. You think the downtrend will last a couple more months? I would think that after such a large fall it's quite risky to stay on that side of the trade.
Good luck to you too!

MercadoLibre Inc.'s Weighted Average Shares Fiasco

Here are 2 very helpful comments from my blog and my response:

Peter
February 8, 2008 at 12:36 pm · Edit

Tim,

Take a look at Note 3 to MELI´s 3Q financial statements: investor.mercadolibre....

It explains the calculation of the weighted shares. Since Q3 included over one month of the company as a private company, the share count has to be the WA of the number of shares when it was privately held and the shares publicly held.

From Q4 onwards that number will be easy to calculate as it is simply the number of shares outstanding.

Regards,

disclosure: I work for MELI.


onlyebay
February 8, 2008 at 12:59 pm · Edit

Timothy, MELI just went public and issued a bunch of shares in Q3 so any weighted average that includes Q3 or before is garbage in garbage out.

www.sec.gov/Archives/e...

Read MELI’s IPO prospectus from way back when and you find “common stock to be outstanding after this offering: 44,226,567″ (with over-allotment). This includes all the new shares they issued and has not changed since day 1 as a public company.


timopg
February 8, 2008 at 7:59 pm · Edit

Thank you both for helping me to understand what’s going on here.

There still is the issue of what calculations MercadoLibre is using to get 0.07 per share for Q3. I get 0.10 using the data they supply or using the 44 million share number I get 0.06. I don’t see where Patrick Schultz’s 0.13 comes from either.

MercadoLibre Inc.'s Weighted Average Shares Fiasco

They did but that has not gone through yet. Of the $229 million expected issuance it is expected that half will be from insiders selling so the dilution will be half that figure.