MercadoLibre Earnings Report

Shares in MercadoLibre (NASDAQ:MELI) fell over 8% in premarket trading on Thursday following disappointing earnings for the September quarter.

The company reported third-quarter earnings per share (EPS) of $7.83, significantly below the consensus estimate of $10.57. However, it generated a revenue of $5.31 billion, slightly exceeding the consensus forecast of $5.27 billion.

In a letter to shareholders, MercadoLibre attributed the profit decline to increased spending on its shipping network and the growth of its credit card business. CFO Martin de los Santos mentioned that the market likely underestimated their investments in credit cards.

Total payments processed by MercadoLibre’s fintech division rose 34% year-over-year, reaching $50.7 billion for the quarter. Meanwhile, the gross merchandise volume from its e-commerce marketplace increased 14% from the previous year to $12.9 billion.

Bank of America analysts commented on the report, indicating that they view any share price weakness as an attractive buying opportunity and reiterated a Buy rating on MELI stock.

MercadoLibre reported operating earnings (EBIT) of $557 million for the quarter, nearly a 30% decline from the same period last year, which fell short of analyst expectations of $783 million. The company's EBIT margin dropped to 10.8%, compared to 18.2% the previous year.

Mercado Pago, the company’s financial services division, experienced a credit portfolio expansion to $6 billion, marking a 77% year-over-year increase—the fastest growth since Q1 2022.

Barclays analysts noted that while it may take time for the scale of MELI's logistics investments and credit mix dynamics to be reflected in consensus projections, investors should keep the overall picture in mind. They emphasized that MELI is the market leader in e-commerce in Brazil, benefiting from an expanding moat due to logistics and a growing profit pool from advertising. They believe the potential near-term pullback in shares will present an attractive entry point for new positions or additions to existing ones.