Is MercadoLibre's Expanding Credit Portfolio Becoming a Growing Risk?

MercadoLibre’s MELI Mercado Pago division has transformed from a payment platform into a large-scale lender, reshaping the company’s overall risk exposure. In 2025, Mercado Pago accelerated loan deployment sharply, with the credit portfolio reaching $11 billion by the end of the third quarter, an 83% year-over-year surge. MELI invested $1.7 billion in net loan growth during the quarter alone, reflecting the capital-intensive nature of this expansion. Credit cards anchor this growth trajectory, with $10.3 billion in quarterly originations and the product accounting for 44% of the entire book. Brazil continues to scale fast, Mexico is catching up and Argentina joined the rollout late in the quarter despite its unstable monetary backdrop.

This rapid expansion raises deep concerns about risk management capacity and asset-quality durability. Mercado Pago is deploying capital at a pace usually associated with full-scale banks, yet it operates within a broader e-commerce ecosystem that must also fund logistics, marketing and marketplace growth. Expanding credit simultaneously across Brazil, Mexico and Argentina, each with distinct regulatory and macro dynamics, may add to the complexity and increase the probability of uneven portfolio performance.

The third-quarter metrics suggest similar pressure points. Net Interest Margin After Losses (NIMAL) fell to 21%, down from 23% sequentially. Early-stage Non-Performing Loans (NPLs) were held at 6.8%, but this apparent stability is difficult to interpret given that much of the portfolio is recently originated and shorter-duration, conditions that often mask early stress.

The Zacks Consensus Estimate for fourth-quarter 2025 Fintech revenues is pegged at $3.63 billion, up 45% year over year, signaling expectations for continued expansion of Mercado Pago. However, this projected growth amplifies concerns over the division’s mounting risk profile, given the rapid pace of credit deployment and weakening margin trends.

MELI Faces Stiff Competition

MercadoLibre faces intense competition from the likes of Sea Limited SE and Nu Holdings NU, which are expanding more aggressively into consumer credit across Latin America.

Sea Limited is scaling personal loans and payment products in Brazil and Mexico, directly overlapping with Mercado Pago’s fast-growing portfolio. With experience in underwriting credit in other emerging markets, Sea Limited brings a more controlled expansion model.

Nu Holdings is also accelerating credit card and consumer loan growth, using its large user base and advanced analytics to target low-risk borrowers. Nu Holdings’ disciplined approach, combined with Sea Limited’s measured credit buildout, heightens pressure on MercadoLibre by raising the overall competitive bar for risk management.

MELI’s Share Price Performance, Valuation & Estimates

MELI shares have gained 21% in the year-to-date period, outperforming the Zacks Internet-Commerce industry and the Zacks Retail-Wholesale sector’s rise of 9.8% and 5.1%, respectively.

MELI’s Price Performance

From a valuation standpoint, MELI stock is currently trading at a forward 12-month Price/Sales ratio of 2.96X compared with the industry’s 2.34X. MELI has a Value Score of D.

MELI’s Valuation

The Zacks Consensus Estimate for MELI’s fourth-quarter 2025 earnings is pegged at $11.85 per share, down by 18.7% over the past 30 days, indicating a decline of 6.03% year over year.

MercadoLibre, Inc. Price and Consensus

MercadoLibre, Inc. price-consensus-chart | MercadoLibre, Inc. Quote

MercadoLibre currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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