MercadoLibre: Impressive Growth But Not The Only Player

Mar. 27, 2023 7:03 AM ETMercadoLibre, Inc. (MELI) StockMELI2 Comments
Value Compounder
96 Followers

Summary

  • MercadoLibre achieved impressive growth in 2022.
  • Projecting MercadoLibre’s future growth requires caution and understanding of its competitive landscape and market conditions.
  • Based on my DCF valuation, MercadoLibre’s intrinsic value per share is $966, indicating that the current stock is slightly overpriced.

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Investment Thesis

MercadoLibre's (NASDAQ:MELI) Q4 2022 results demonstrate impressive growth and profitability, but we should not make assumptions that this growth rate will be sustained. Given that the e-commerce and fintech industry in Latin America is

This article was written by

Value Compounder
96 Followers
My investment strategy involves using the discounted cash flow (DCF) model to estimate the intrinsic value of companies. This involves analyzing a range of factors, including financial statements, industry trends, competitive landscape, and management quality, among others. By carefully assessing these factors, I can arrive at a reasonable estimate of a company's intrinsic value. Once I've determined the intrinsic value using the DCF model, I look for opportunities to purchase the stock at a price that is well below this value, with a reasonable margin of safety. I'm patient in my approach, waiting for the right opportunity to arise before making a move. However, I don't just buy and hold indefinitely. I regularly reassess the intrinsic value of the companies in my portfolio using the DCF model to ensure that they are still undervalued. If the stock price rises significantly above the intrinsic value, I may choose to sell the shares and take my profits. My investment philosophy is heavily influenced by the teachings of Aswath Damodaran, who has provided valuable insights into how to effectively apply the DCF model in valuing companies. I'm also not limited to any specific industry or geographic location when it comes to investing. Instead, I look for opportunities wherever they may arise, always keeping an eye out for promising companies that can deliver strong returns over the long term.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of MELI either through stock ownership, options, or other derivatives. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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