What Happened?
Shares of latin American e-commerce and fintech company MercadoLibre (NASDAQ: MELI) fell 10% in the morning session after the company reported mixed fourth quarter results.
While sales came in strong and well ahead of analysts' estimates, earnings fell short. Operating margins fell to 10.1%, down from 13.5% in the previous year. Investors were likely concerned that heavy spending on logistics, AI expansion, and marketing is eating into profits. Overall, we think this was a mixed quarter with some key metrics above expectations. The stock's reaction suggests the market was expecting more.
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What Is The Market Telling Us
MercadoLibre’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 2 months ago when the stock gained 9.3% on the news that traders speculated that recent geopolitical developments in Venezuela could unlock a major new market for the e-commerce giant.
Following reports regarding the U.S.-facilitated removal of President Maduro, investors rallied around the possibility that a stabilized Venezuelan economy could finally open its borders to MercadoLibre's full suite of logistics and fintech services. While the country currently represents a negligible portion of sales, the sudden prospect of accessing South America's fifth-largest population under a more open economic framework drove the stock to double-digit gains.
MercadoLibre is down 12.1% since the beginning of the year, and at $1,735 per share, it is trading 33.6% below its 52-week high of $2,614 from June 2025. Investors who bought $1,000 worth of MercadoLibre’s shares 5 years ago would now be looking at an investment worth $1,076.
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