MercadoLibre, Inc. (MELI): A Bull Case Theory

We came across a bullish thesis on MercadoLibre, Inc. on Compounding Your Wealth’s Substack by Sergey. In this article, we will summarize the bulls’ thesis on MELI. MercadoLibre, Inc.'s share was trading at $2,373.89 as of July 31^st. MELI’s trailing and forward P/E were 58.40 and 45.87, respectively according to Yahoo Finance.

MercadoLibre (MELI) stands as Latin America’s dominant e-commerce and fintech platform, delivering 37% year-over-year revenue growth to $5.9 billion in Q1 2025, with $494 million in net income. Its deeply integrated ecosystem—spanning e-commerce, digital payments, logistics, and credit—creates powerful network effects across 18 countries. With 66.6 million unique marketplace buyers and 64 million monthly fintech users, MELI processes $58 billion in TPV and shipped over 1.2 billion items in 2024, underscoring its scale advantage.

Its dual-segment structure—Commerce (56% of revenue) and Fintech (44%)—continues to deliver strong growth, with the Fintech segment outpacing overall revenue. The Commerce segment saw 32% YoY growth, while GMV rose 17% YoY and the take rate improved to 25%, signaling rising monetization. Meanwhile, Fintech revenue grew 43% YoY, supported by robust user growth and stable take rates. MELI’s proprietary logistics network and MELI Air reinforce its moat, alongside strong brand equity—ranked 50th globally with a $49.8B brand value.

Its credit portfolio grew 75% YoY to $7.8 billion, with stable NPL trends, and selective tightening toward higher-quality borrowers. Argentina’s resurgence, now contributing 23% of revenue with 125% YoY growth, affirms MELI’s strategic pivot toward the region. Despite macro risks, MELI’s operating margins expanded and its balance sheet remains solid, with $9.6B in cash exceeding total debt. Stock-based compensation is just 2% of revenue, and dilution is minimal. Trading at a Forward EV/Sales of 4.3 and a PEG ratio of approximately 1, MELI appears undervalued relative to its 30%+ growth. The synergy between fintech and commerce, coupled with scale, brand, and network advantages, positions MELI as a high-conviction long-term compounder.

Previously, we covered a bullish thesis on MercadoLibre, Inc. (MELI) by Daan | InvestInsights in May 2025, which highlighted its strong e-commerce and fintech growth in Latin America. The stock has depreciated by ~8% since our coverage, as the valuation has compressed. The thesis still stands. Sergey shares a similar view but emphasizes its segment margins and valuation-driven upside.

MercadoLibre, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 108 hedge fund portfolios held MELI at the end of the first quarter which was 96 in the previous quarter. While we acknowledge the potential of MELI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.