Increased Competitive Pressure Weighed on MercadoLibre (MELI)

Hardman Johnston Global Advisors, an investment management company, released its “Hardman Johnston Global Equity Strategy” investor letter for the fourth quarter of 2025. A copy of the letter can be downloaded here. Global equity markets delivered robust results in the quarter, backed by easing inflation trends and strong economic data. The Hardman Johnston Global Equity Strategy returned 2.91%, net of fees, compared to the MSCI AC World Net Index’s 3.29% gain. The Financials and Consumer Staples sectors contributed to the performance, while the Industrials and Consumer Discretionary sectors detracted from relative performance. In addition, please check the Strategy’s top five holdings to know its best picks in 2025.

In its fourth-quarter 2025 investor letter, Hardman Johnston Global Equity Strategy highlighted MercadoLibre, Inc. (NASDAQ:MELI) as one of its leading detractors. MercadoLibre, Inc. (NASDAQ:MELI) is an online commerce platform that operates Mercado Libre Marketplace and Mercado Pago FinTech platforms. MercadoLibre, Inc. (NASDAQ:MELI) shares traded between $1,723.90 and $2,645.22 over the past 52 weeks. On January 26, 2026, MercadoLibre, Inc. (NASDAQ:MELI) stock closed at $2,212.62 per share. One-month return of MercadoLibre, Inc. (NASDAQ:MELI) was 9.49%, and its shares lost 3.38% of their value over the last three months. MercadoLibre, Inc. (NASDAQ:MELI) has a market capitalization of $112.174 billion.

Hardman Johnston Global Equity Strategy stated the following regarding MercadoLibre, Inc. (NASDAQ:MELI) in its fourth quarter 2025 investor letter:

"Within Consumer Discretionary, the largest detractors were Prosus N.V. Class N and MercadoLibre, Inc. (NASDAQ:MELI). The weakness in MercadoLibre Inc. during the fourth quarter reflected increasing competitive pressure from Amazon and the company’s commitment to reinvest and the corresponding impact on margins. During the quarter, Amazon launched two new initiatives to attract new merchants to the platform, including promotions around fulfillment fees for merchants and reduced commissions for new merchants. Competition from Amazon cannot be taken lightly but we do not believe that Amazon’s activity erodes the moat around MercadoLibre’s business in Brazil given the ecosystem strengths around MercadoLibre’s best-in-class logistics network in the region, and the synergistic ecosystem effects of their commerce, fintech, advertising, loyalty, and content distribution offerings. We view the increased competitive pressure as an acknowledgement of both the fertile opportunity in Brazilian ecommerce and MercadoLibre’s leadership position. Separately, MercadoLibre continues to reinvest in its core offerings through lower free shipping thresholds, greater social commerce spend, and expansion of its credit card portfolio. MercadoLibre’s spending intentions weigh on the near-term margin outlook and led to modest negative revisions. Historically, higher investment has strengthened MercadoLibre’s competitive position."

MercadoLibre, Inc. (NASDAQ:MELI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 109 hedge fund portfolios held MercadoLibre, Inc. (NASDAQ:MELI) at the end of the third quarter, which was 116 in the previous quarter. In Q3 2025, MercadoLibre, Inc. (NASDAQ:MELI) reported 39% year-on-year growth. While we acknowledge the potential of MercadoLibre, Inc. (NASDAQ: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.

In another article, we covered MercadoLibre, Inc. (NASDAQ:MELI) and shared the list of stock picks by Ken Fisher. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.