MercadoLibre, Inc (MELI): A Bull Case Theory

We came across a bullish thesis on MercadoLibre, Inc on Pitchstack Investing Substack. In this article, we will summarize the bulls’ thesis on MELI. MercadoLibre, Inc's share was trading at $2,402.75 as of 18^th June. MELI’s trailing and forward P/E were 59.11 and 46.51 respectively according to Yahoo Finance.

MercadoLibre, a dominant force in Latin America’s e-commerce and fintech ecosystems, is taking a bold strategic step to strengthen its market position. Operating primarily in Brazil, Mexico, and Argentina, the company recently lowered its free shipping threshold in Brazil from R$79 to R$19. This move directly targets a significant portion of its business, as orders below R$19 already make up 19% of gross merchandise volume (GMV) and over half—53%—of total items sold.

While the shift is expected to reduce annual pre-tax profits by approximately $390 million, it is a deliberate trade-off aimed at driving long-term value. By easing access to free shipping, MercadoLibre is increasing order frequency, appealing to cost-conscious consumers, and reinforcing customer loyalty—key levers for sustaining its leadership in a fiercely competitive space.

More than a simple pricing decision, this adjustment strengthens MercadoLibre’s marketplace moat and fortifies the company’s integrated e-commerce and fintech flywheel, which has proven to be a powerful growth engine across the region. The strategic importance of this move lies not just in growing volume but in amplifying network effects that make both the platform and its financial services more indispensable to users.

As MercadoLibre continues to scale, this initiative positions it to capture deeper market share and expand user engagement, even at the expense of short-term profitability. The potential upside in customer lifetime value, platform entrenchment, and ecosystem monetization may far outweigh the near-term margin impact, making this a calculated risk aligned with MercadoLibre’s long-term vision.

Previously we covered a bullish thesis on MercadoLibre, Inc. by Daan | InvestInsights in May 2025, which highlighted the company’s dominant position in Latin America’s e-commerce and fintech sectors, supported by strong user growth and secular digital adoption trends. The company's stock price has depreciated by approximately 7% since our coverage. This is because the thesis didn’t play out in the short term due to margin pressures. The thesis still stands as MELI remains well-positioned for long-term growth. Pitchstack Investing shares a similar view but emphasizes the strategic implications of the new free shipping policy.

MercadoLibre, Inc is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 44 hedge fund portfolios held MELI at the end of the first quarter which was 0 in the previous quarter. While we acknowledge the risk and potential of MELI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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