MELI vs. PDD: Which E-Commerce Stock Has More Upside Potential?

MercadoLibre MELI and PDD Holdings PDD are two of the most dynamic e-commerce platforms outside the United States, with MELI leading the Latin American market and PDD expanding aggressively in China and globally. Both companies have built a strong foundation for logistics, user experience and supply chain, positioning themselves as key players in their respective regions.

As global investors seek growth opportunities beyond U.S. e-commerce giants, MELI and PDD offer exposure to two fast-evolving but very diversified markets. But which is better poised to deliver upside for investors in 2025? Let’s find out.

The Case for MELI Stock

MercadoLibre is gaining ground in Latin America’s retail sector by steadily grabbing share from physical stores, which still account for nearly 85% of retail consumer spending. With less than 5% market share, MELI continues to invest in platform improvements that have pushed brand preference scores to all-time highs in Brazil, Mexico, Argentina and Chile, driving a 25% year-over-year increase in unique active buyers in the first quarter of 2025.

Stronger buyer activity fuelled 30% forex-neutral GMV growth in Brazil and 23% in Mexico in the first quarter, while Argentina posted standout growth of 126%, led by the supermarket category. Regionally, supermarket items sold rose 65% year over year. Total GMV hit $13.3 billion, with 492 million items sold. Commerce revenues grew 32% in USD and 57% forex-neutral, reflecting robust engagement.

MELI’s logistics network continues to scale efficiently. Fulfilment penetration surpassed 60% in Brazil, and the cost per order declined across key markets, enabling further investment in growth drivers like free shipping.

MercadoLibre is focused on scaling underpenetrated categories like supermarkets, where online adoption is rising but still low across Latin America. Its 1P model is expected to play a growing role in ensuring supply consistency and improving unit economics. Logistics expansion remains a priority, especially in Brazil and Mexico, to support anticipated demand. Meanwhile, new revenue streams like Mercado Ads and Mercado Play are expected to grow long-term monetization.

The Case for PDD Stock

PDD Holdings is navigating a challenging environment by prioritizing long-term growth through aggressive merchant support and supply chain investment. In the first quarter of 2025, the company expanded its 100 billion support program to help small and mid-sized merchants with fee reductions, digital tools, logistics and brand development, aiming to ease pressure amid intensifying competition in China’s retail landscape.

Revenues rose 10% year over year to RMB95.7 billion ($13.3 billion) in the first quarter, with marketing and transaction services growing 15% and 6% year over year, respectively. However, heavy investment in promotions and ecosystem support drove non-GAAP operating profit down to RMB18.3 billion from RMB28.6 billion a year ago, with operating margin falling from 33% to 19%.

PDD also accelerated its push in agriculture e-commerce, introducing digital systems for pricing, traceability and logistics to modernize rural supply chains. These efforts enhance value for both merchants and consumers.

Despite near-term margin pressure, PDD is focused on building a stronger, more resilient ecosystem. By improving product quality, service standards and consumer trust through transparent pricing and deep subsidies, the company aims to drive sustainable, high-quality growth across supply and demand channels.

Price Performance and Valuation of MELI and PDD

In the trailing three months, MELI shares have gained 29.7% while PDD shares have lost 8.5%.

The increase in MELI shares can be attributed to its continued success in taking share from offline retail, supported by improved brand perception and solid execution across key markets. However, PDD shares declined due to concerns over rising competition, which has kept margins under pressure, as the company ramps up spending on ecosystem initiatives and merchant support amid a challenging macro and regulatory environment.

MELI and PDD Stock Performance

Valuation-wise, MELI and PDD’s shares are currently overvalued, as suggested by a Value Score of D and C, respectively.

In terms of forward 12-month Price/Sales, MELI shares are trading at 4.09X, while PDD is trading at 2.31X.

Price/Sales (F12M)

How Do Earnings Estimates Compare for MELI & PDD?

The Zacks Consensus Estimate for MELI’s second-quarter 2025 earnings is pegged at $12.01 per share, which has been revised upward by 15.25% over the past 60 days, indicating a 14.6% increase year over year.

MercadoLibre, Inc. Price and Consensus

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

The Zacks Consensus Estimate for PDD’s second-quarter 2025 earnings is pegged at $2.04 per share, which has been revised downward by 28.42% over the past 60 days, indicating a 36.25% decrease year over year.

PDD Holdings Inc. Sponsored ADR Price and Consensus

PDD Holdings Inc. Sponsored ADR price-consensus-chart | PDD Holdings Inc. Sponsored ADR Quote

MELI’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing the same once, with an average surprise of 22.59%. PDD’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters while missing the same twice, delivering a negative average surprise of 6.21%.

Conclusion

MercadoLibre is benefiting from strong e-commerce momentum and consistent market share gains across Latin America. Strategic investments in logistics, brand experience and user engagement continue to drive growth, supported by improving operational efficiency and fulfillment scale across key markets.

PDD faces near-term headwinds due to rising competition and margin pressure from aggressive merchant support programs. While its long-term strategy focuses on ecosystem expansion, current profitability concerns and uncertain external conditions make MELI the better pick for sustained growth.

MELI, with a Zacks Rank #3 (Hold), currently has an edge compared with PDD, which has a Zacks Rank #5 (Strong 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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