Up Nearly 300% in 2 Years, It’s Not Too Late to Buy Mercado Libre

Key Points

• Mercado Libre's sustained, high-double-digit growth warrants a higher multiple in 2025.
• The balance sheet remains healthy, sustaining growth for years to come.
• Analysts' trends suggest at least a 50% upside potential: technical indications are more robust.

Mercado Libre’s NASDAQ: MELI shares are up nearly 300% in the last two years and have ample room to run. The business is growing and accelerating, with plenty of market left to address. Trading above 40x earnings in 2025, the stock is valued at roughly 12x its 2030 forecast, which is likely to be low, setting this market up for another triple-digit gain.

North American eCommerce peer Amazon trades at approximately 32x the current year's earnings, suggesting the increase in MELI shares could approach 200% between now and the start of the next decade, only five years away. 

And the analysts' trends align with the outlook for rising share prices. The analysts are expanding their coverage, raising their ratings and stock price targets ahead of the Q2 release and are unlikely to end those trends afterward.

As of early August, the stock is rated as a Moderate Buy with a bullish bias and comes with a forecast for a 50% upside at the high end of the range. 

The analyst forecast for a 50% upside is shy of the triple-digit gains implied by the technical action, but it is a good starting point and likely to be increased over time as quarterly results are issued. Likewise, the institutional group provides support in Q3, owning roughly 90% of the stock and reverting to buying in the first weeks of the quarter. 

Mercado Libre had a Robust Q2, Indicating Strength to Continue

Mercado Libre reported mixed results for Q2, with revenue topping the consensus reported by MarketBeat and earnings falling short. However, the shortfall in earnings is due primarily to growth investments, including acquisitions and infrastructure, that are driving the top-line results. 

Mercado Libre’s top-line result continues with another quarter of high double-digit growth, surpassing 30%. The 34% increase beat the consensus estimate by nearly 200 basis points, with strong performance across all regions and both operating segments. 

The consumer segment was substantial, growing by 29%, but fintech was stronger at 40% with user counts and merchandise volume contributing to the gains. 

The margin news is a sticking point that will dissipate with time. The company logged a 210-basis-point contraction in profit margin, leaving the GAAP earnings well below the consensus forecast. Yet they are up 14% year-over-year and sufficiently strong to sustain the growth outlook.

The critical takeaway is that margin impairment is due primarily to business investment and will result in greater sales and earnings leverage over time. Regarding the guidance, the company doesn’t give specific figures but provides an optimistic view that its disciplined investment approach would continue to drive robust results. 

Mercado Libre’s balance sheet highlights provide no red flags for investors, instead offering incentives to buy. The highlights include increased cash, current, and total assets, only partially offset by increased liabilities.

The net result is that equity increased by 30% and leverage remains low, allowing for modest share repurchases and reinvestment. The buybacks aren’t much, but they reduce the count incrementally each quarter.

Mercado Libre is Set up to Ratchet Higher in 2025

The stock price action in Mercado Libre shares is bullish. The market surged to a new all-time high in early 2025 and consolidated, confirming support at a critical level following the Q2 earnings release. 

That level aligns with prior highs and the critical moving average in the $2,310 range and is a likely starting point for the next rally. Previous market action suggests the upswing will be quick, taking the price to a new all-time high within weeks of the rally starting.