MercadoLibre Stock Tanks 15% After Earnings Miss -- But Is This the Buy Signal?
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MercadoLibre's (NASDAQ:MELI) stock took a hard hit in after-hours trading, tanking over 15% as Q3 earnings missed Wall Street's profit target. The Latin American e-commerce giant saw revenue climb 35% year-over-year, but gross merchandise volume grew just 14%a slower pace than expected. The good news? Unique buyers shot up by 21%, with Brazil leading the pack, hinting at strong regional demand. But with EPS landing at $7.83, short of the $9.85 consensus, and adjusted EBITDA falling to $714 million against an anticipated $928 million, it's clear investors weren't thrilled.
On the fintech front, MercadoLibre's Mercado Pago service continued to gain traction, with monthly active users up 35% year-over-year, reaching 56 million. The booming credit portfolio and expansion across Brazil, Mexico, and Argentina gave fintech a big lift. However, the company's heavy investment in credit and logistics expansion did weigh on margins. Despite short-term pressures, MercadoLibre isn't shying away from doubling down on these key growth drivers, setting up for what management sees as massive long-term potential in fintech and digital payments.
Looking ahead, MercadoLibre's leadership is bullish on untapped growth across e-commerce, digital payments, and logistics in Latin America, where online retail is still in its early days. By ramping up logistics and expanding fintech services, they're banking on capturing the region's enormous potential. Management remains confident that these strategic moves are unlocking big growth opportunities, setting the stage for MercadoLibre to stand strong as competition heats up.
This article first appeared on GuruFocus.