By Teresa Rivas

It's hard to resist a really good sale, and MercadoLibre stock looks too cheap right now.

Forget Amazon.com. In the Amazon River's home turf and beyond, MercadoLibre is king. It's the dominant e--commerce and fintech platform in Latin America, serving more than 650 million people in 18 countries, though most of its revenue comes from Brazil -- where it's reached a staggering 90% of all adults -- Mexico, and Argentina. The company is growing quickly, attracting new users, and expanding into new markets and businesses. That helped the stock gain more than 30% in the one-year period after Barron's recommended it in March 2024.

More recently, the shares have sold off on concerns about the broader Latin American macroeconomic backdrop, intensifying competition, and margin compression as the company reinvests in its business. That has reset expectations lower ahead of the company's first-quarter earnings report, coming on Thursday.

All of which is good news for bargain hunters. "We think the selloff creates an opportunity because the long--term growth drivers remain intact, and earnings are likely to hinge more on management's outlook than on near--term margins," says Derrick Irwin, a senior portfolio manager and co-head of the Intrinsic Emerging Markets Equity team at Allspring Global Investments, which owns the stock. "If management can reinforce confidence in 2026 growth and show that recent investments are starting to pay off, the stock could respond positively."

Reinvestments in the business are necessary, given that new players from China and elsewhere have entered the market. But it also comes from a position of strength, as earnings per share more than doubled in the two-year period ending in 2025 and have soared nearly fourfold since 2022.

"MercadoLibre is in a deliberate investment cycle, deploying capital across a number of strategic growth initiatives," says Ryan Kerley, a research analyst at Vontobel, which owns the shares. Those include smart moves like lowering the free shipping threshold in Brazil, increasing sales and marketing spend, and issuing more credit cards. "These are moat-strengthening investments, and we can see they are working," he adds.

Gross merchandise value growth has climbed the past two quarters in Brazil, while unit logistic costs fell 11% in the most recent quarter.

"While near-term profitability will remain under pressure as the company continues to respond to increased competitive intensity, we like the stock over the long term as these investments help MercadoLibre sustain its wide moat," says portfolio manager Chiara Salghini, also at Vontobel.

Nor will profits suffer too much. Consensus calls for MercadoLibre to earn $8.52 a share in the quarter, a slight year-over-year decline. But the longer view is more impressive: Analysts expect EPS to jump more than 20% this year to $47.36, and soar over 40% in 2027, to $66.41. Gross margins have edged downward, but are still well north of 40%.

That means what the company says about its outlook, in terms of demand, ongoing investment, and how it's beginning to see the benefits of improving the business will likely mean more than the report's numbers. Yet beyond the results, there's a lot to like about the company longer-term.

"Because MercadoLibre's marketplace and payments platform are embedded in everyday commerce across its core markets, customer relationships are sticky and increasingly profitable," says Irwin.

The company's dominant position creates a virtuous cycle in which a large seller base attracts more buyers. That, in turn, means higher density in delivery areas, which can be served at lower costs. In 2025, fintech revenue growth soared 46% from the prior year, while commerce revenue growth (from its marketplace) jumped 34%.

The average price target among analysts tracked by FactSet is $2,490, but even getting to $2,300 would mean a roughly 27% rise from a recent $1,810. Susquehanna analyst James Friedman reiterated a $2,400 target ahead of earnings, citing the company's robust growth, while recent fuel price increases will likely only push up logistics costs in the mid-single digit range. "Seems like a good setup to us," he says.

Of course, MercadoLibre isn't the only player to recognize the value in the Latin American market, where more people are growing more comfortable buying online and leapfrogging from a cash economy directly to digital payments, bypassing traditional banks. It faces competition from giants Amazon and Wal-Mart de Mexico, locally grown rivals such as Nu Holdings, and cheap Chinese entrants like PDD Holdings' Temu.

That is a real threat, but through its investments it appears that MercadoLibre is holding its own. Its market share is steady, and its gross merchandise value and fintech offerings are moving steadily higher.

"Competition is real, but MercadoLibre has faced strong competitors before and has consistently widened its lead," says Irwin. "Its key sustainable advantage is the integration of marketplace, logistics, and payments."

Moreover, its focus on the unbanked and underbanked means that it can continue expanding throughout economic cycles, as more people begin to move away from cash for everyday purchases.

The shares trade at 27 times next year's expected earnings -- cheap for a company that has averaged a triple-digit multiple over the past five years, is delivering double-digit EPS growth, and should see gross margins well above 50% by 2028.

Who can resist such a good deal?

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May 06, 2026 05:38 ET (09:38 GMT)

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