MercadoLibre (MELI) shares plunged 6.43% in after-hours trading on Wednesday, reversing initial gains following the release of its second-quarter financial results.

The Latin American e-commerce and fintech giant reported Q2 earnings of $9.19 per diluted share, down from $10.31 a year earlier, though beating analyst estimates of $8.65. Revenue surged 50% to $10.17 billion, exceeding the $9.78 billion consensus. However, net profit fell approximately 11% year-over-year to $466 million, marking the third consecutive quarter of profit declines, as heavy investments in free shipping, credit card expansion, and cross-border sales weighed on short-term profitability. The EBIT margin dropped sharply to 6.7% from 12.2% a year earlier, reflecting the company's deliberate strategy of reinvesting gains to capture market share in key markets like Brazil and Argentina.

While the revenue beat initially sent shares higher in extended trade, investor sentiment soured as the extent of margin compression and the ongoing profit decline became apparent, leading to the sharp after-hours sell-off.