Core Insights - Mercado Libre is experiencing a consumption recovery in Argentina, highlighted by a record sale of 20 million products in August [1] - The company reported significant growth in nonessential product categories starting from May, with technology products like notebooks, tablets, and televisions showing increases of 173%, 91%, and 59% respectively [1] - Mercado Libre is expanding its lending services, with a 69% year-over-year increase in lending to consumers, merchants, and SMEs reported in September [1] Group 1 - The adoption of credits for merchandise purchases and investments is rising, with a 62% year-on-year increase in credits granted to SMEs and retail businesses, reaching over 125,000 SME users [2] - Interest-free installment financing and promotions positively impacted physical stores, leading to a 68% increase in QR code transactions year over year in September [2] - Latin America is becoming a crucial target for FinTechs, with Mercado Pago applying for a banking license in Mexico to enhance its services [2] Group 2 - The company aims to become the largest digital bank in Mexico upon receiving the banking license, having seen its user base quintuple during its two years as an Electronic Payment Funds Institution [3] - Brazil also represents a significant market for FinTechs, with two-thirds of the population owning smartphones and 63% engaging in digital banking [3]

Core Viewpoint - The recommendation is to buy MercadoLibre (NASDAQ: MELI) shares following the 2Q24 results, continuing the previous recommendation made on April 10th [1] Group 1: Company Performance - The report indicates a positive outlook for MercadoLibre based on its recent financial results, suggesting strong performance in the Latin American equity market [1] Group 2: Analyst Background - The analyst has over 5 years of experience in equity analysis specifically in Latin America, providing in-depth research and insights for informed investment decisions [1]

Group 1 - The continent lacks a leading position in population size, land area, GDP, and demographics compared to other continents [1] - PropNotes focuses on identifying high-yield investment opportunities for individual investors, simplifying complex concepts and providing actionable advice [1] - The content produced by PropNotes aims to assist investors in making informed market decisions, supported by expert research [1] Group 2 - The article expresses the author's personal opinions and discloses a beneficial long position in MELI shares [2] - Seeking Alpha clarifies that past performance does not guarantee future results and does not provide specific investment recommendations [2] - The analysts contributing to Seeking Alpha may not be licensed or certified by any regulatory body [2]

Group 1 - The results reflect a sensitive balance between margin, growth, customer satisfaction, and shareholder expectations, indicating challenges faced by the company [1] - The company aims to invest in firms with strong qualitative attributes, purchasing them at attractive prices based on fundamentals, and holding them long-term [1] - The management strategy focuses on maintaining a concentrated portfolio to avoid underperformers while maximizing exposure to high-potential winners [1] Group 2 - The analyst has a beneficial long position in AMZN shares, indicating confidence in the company's future performance [2] - The article expresses personal opinions of the analyst without any compensation from the companies mentioned, ensuring an independent viewpoint [2] - Seeking Alpha emphasizes that past performance does not guarantee future results, highlighting the inherent uncertainties in investment [2]

Group 1 - MercadoLibre has a strong history of beating earnings estimates, with an average surprise of 11.15% over the last two quarters [1] - In the most recent quarter, MercadoLibre reported earnings of $10.48 per share, exceeding the expected $8.72 per share by 20.18% [1] - The previous quarter also saw a positive surprise, with actual earnings of $6.78 per share compared to an estimate of $6.64 per share, resulting in a surprise of 2.11% [1] Group 2 - Recent estimates for MercadoLibre have been increasing, indicating a positive outlook for future earnings [2] - The Zacks Earnings ESP for MercadoLibre is currently +11.42%, suggesting analysts are optimistic about its near-term earnings potential [3] - Combining the positive Earnings ESP with a Zacks Rank of 2 (Buy) indicates a strong possibility of another earnings beat [3] Group 3 - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, reflecting the latest analyst revisions [3] - Stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [2] - It is crucial to check a company's Earnings ESP before quarterly releases to enhance the likelihood of successful investment decisions [4]

Core Viewpoint - MercadoLibre (MELI) shares fell by 4.6% after JP Morgan downgraded its rating from Overweight to Neutral due to concerns over the company's credit business, rising operational costs, and potential tax rate increases [1]. Financial Metrics - MercadoLibre is currently trading at $1,971 per share, with a market capitalization of approximately $99.92 billion [1]. - The company's price-to-earnings (P/E) ratio is 71.23, indicating a premium valuation compared to its earnings [1]. - The price-to-book (P/B) ratio stands at 27.33, while the GF Value is $2,103.15, suggesting that the stock is fairly valued [1]. Financial Health Indicators - The company has a strong Altman Z-Score of 5.48, reflecting solid financial health [2]. - The Piotroski F-Score of 7 indicates a very healthy financial situation [2]. - Despite these positive indicators, recent concerns could affect future performance [2]. Operational Insights - MercadoLibre is experiencing medium-level warning signs, including being close to a 10-year high price and a price-to-sales (P/S) ratio nearing a 2-year high [2]. - The company has issued new debt, and its asset growth of 65.5% over the past 5 years has outpaced revenue growth of 57.3%, suggesting potential efficiency concerns [2]. Historical Performance - The company has impressive historical growth rates, with a 3-year revenue growth rate of 52.6% and a strong return on invested capital (ROIC) of 27.03% [3]. - Investors are advised to consider these growth factors alongside the recent downgrade and operational challenges when evaluating investments in MELI [3].

Core Viewpoint - The article highlights that while artificial intelligence (AI) has been a dominant investment theme, there are other significant investment opportunities, particularly in e-commerce, as evidenced by hedge fund managers selling shares of Nvidia and purchasing shares of Shopify and MercadoLibre [1][2]. Group 1: Shopify - Shopify offers a comprehensive commerce solution, enabling sellers to manage businesses across various channels, including online marketplaces and social media [3]. - The company holds a strong competitive position, accounting for 10% of retail e-commerce sales in the U.S. and 6% in Western Europe, recognized as a leader in e-commerce and B2B commerce solutions [3]. - Shopify's Q2 revenue increased by 21% to $2 billion, with a non-GAAP net income rise of 85% to $0.26 per diluted share, driven by strong performance in subscription software and merchant services [4]. - The company estimates its addressable market at $849 billion, with significant potential from offline retail and B2B e-commerce [4]. - Wall Street anticipates Shopify's adjusted earnings to grow at 26% annually through 2027, suggesting a current valuation of 77 times adjusted earnings may appear high, but long-term growth potential remains [5]. Group 2: MercadoLibre - MercadoLibre is the largest online marketplace in Latin America, projected to account for 29% of retail e-commerce sales in the region by 2024, up from 28.3% in 2023 [6]. - The company's ecosystem includes logistics support, ad tech software, payment processing, and lending services, enhancing convenience for merchants [6]. - In Q2, MercadoLibre's revenue surged by 41% to $5 billion, with GAAP earnings increasing by 103% to $10.48 per diluted share, reflecting a net profit margin expansion to 10.5% [7]. - The commerce segment has shown consistent sales acceleration for five consecutive quarters, supported by advertising strength and the MELI+ loyalty program [7]. - Future earnings growth is expected at 45% annually through 2025, making the current valuation of 74 times earnings appear reasonable for patient investors [8].

Core Viewpoint - MercadoLibre and PDD are two high-growth e-commerce companies with significant upside potential, but their growth trajectories and market dynamics differ substantially [1]. Company Overview - MercadoLibre operates in 18 Latin American countries, primarily generating revenue from Brazil, Mexico, and Argentina, and has developed its own logistics and digital payment platform, Mercado Pago [2]. - PDD operates solely in China, having phased out its first-party services, and offers an online agricultural platform while owning Temu, a cross-border marketplace [2]. Growth Comparison - From 2018 to 2023, MercadoLibre's revenue grew at a CAGR of 59% in USD, while PDD's revenue rose at a CAGR of 79% in USD, indicating PDD's faster but more volatile growth [3][4]. - MercadoLibre's growth was bolstered by the pandemic, while PDD experienced significant growth in 2019 and 2020, followed by a slowdown due to COVID-19 lockdowns in China [4]. Future Growth Projections - Analysts expect MercadoLibre's revenue to grow at a CAGR of 27% in USD from 2023 to 2026, while PDD's revenue is projected to rise at a CAGR of 36% in RMB [5]. Profitability Analysis - MercadoLibre became profitable in 2021, with net income growing at a CAGR of 244% in USD, while PDD also turned profitable in 2021, with net income growing at a CAGR of 178% in RMB [6]. - Future net income growth is expected to be 49% CAGR in USD for MercadoLibre and 42% CAGR in RMB for PDD from 2023 to 2026 [6]. Valuation Insights - MercadoLibre trades at about 42 times next year's earnings, while PDD trades at approximately 10 times, indicating PDD may be undervalued despite recent warnings of a slowdown [7]. Investment Recommendation - While MercadoLibre has shown strong performance, it may be due for a correction, whereas PDD's lower valuation could present a better buying opportunity for investors willing to accept volatility [8].

Company Performance - MercadoLibre's stock closed at $2,066.12, reflecting a +0.69% change from the previous day, outperforming the S&P 500's decline of 0.93% [1] - Over the past month, MercadoLibre shares have decreased by 0.47%, while the Retail-Wholesale sector increased by 5.61% and the S&P 500 rose by 2.17% [1] - The upcoming earnings report is anticipated to show an EPS of $11.22, representing a 56.7% increase year-over-year, with expected quarterly revenue of $5.25 billion, up 39.59% from the previous year [1] Fiscal Year Estimates - For the entire fiscal year, earnings are projected at $37.41 per share and revenue at $20.51 billion, indicating increases of +92.24% and +41.7% respectively from the prior year [2] - Recent revisions to analyst forecasts for MercadoLibre are crucial as they reflect short-term business trends, with positive revisions indicating a favorable business outlook [2] Zacks Rank and Valuation - MercadoLibre currently holds a Zacks Rank of 2 (Buy), with a 6.22% increase in the Zacks Consensus EPS estimate over the past month [3] - The company's Forward P/E ratio stands at 54.85, which is a premium compared to the industry's average Forward P/E of 23.51 [3] - The PEG ratio for MercadoLibre is 1.25, compared to the Internet - Commerce industry's average PEG ratio of 1.04 [3] Industry Overview - The Internet - Commerce industry is part of the Retail-Wholesale sector and holds a Zacks Industry Rank of 68, placing it in the top 27% of over 250 industries [4] - The Zacks Industry Rank measures the strength of industry groups based on the average Zacks Rank of individual stocks, with the top 50% rated industries outperforming the bottom half by a factor of 2 to 1 [4]

Core Viewpoint - Growth stocks, such as MercadoLibre, are appealing due to their potential for above-average financial growth, but identifying the right ones can be challenging due to associated risks and volatility [1] Group 1: Earnings Growth - MercadoLibre has a historical EPS growth rate of 201.7%, with projected EPS growth of 92.2% for the current year, significantly outperforming the industry average of 26.8% [3] Group 2: Cash Flow Growth - The year-over-year cash flow growth for MercadoLibre is 70.7%, compared to an industry average of -3%. The company's annualized cash flow growth rate over the past 3-5 years is 136.1%, against the industry average of 7.5% [4] Group 3: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for MercadoLibre, with the Zacks Consensus Estimate for the current year increasing by 6.2% over the past month [5] Group 4: Overall Assessment - MercadoLibre has achieved a Growth Score of A and a Zacks Rank of 2, indicating it is a strong candidate for growth investors [6]