MercadoLibre: Favorably Skewed Towards Reward But Risks Remain

Summary

• MercadoLibre is Latin America's largest e-commerce platform, with more than 140 million active users and 1 million active sellers as of the end of 2021 in 18 countries.
• Third quarter results were strong, with net income up 61% year-on-year. The operating margin for the quarter was unprecedented at 11%.
• Mercado speaks of a challenging macro environment, but provisions for current loans remained stable.
• The high risk-reward profile is now favorably skewed toward the reward part of the equation, as the stock's valuation is historically low.

gorodenkoff

Introduction

MercadoLibre (NASDAQ:MELI) was a popular stock since the corona crisis. The corona measures forced physical stores to close, giving an extra boost to online shopping. Favorable for MercadoLibre, as it is the largest e-commerce platform in Latin America.

The

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in MELI over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.