MELI: A Brazilian Rhapsody (Or, Why It Wobbled)

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Alright, folks, gather ’round! We’re talking about MercadoLibre ([MELI 0.15%]), the Latin American Amazon… but with more samba, naturally. This stock did a little jig this morning – a five percent leap! – then promptly tripped over its own feet and nearly gave it all back. As of this very moment, it’s clinging to a measly 0.5% gain. A nail-biter, I tell ya! A nail-biter! You’d think they were trying to decide what color to paint the warehouse.

The initial pop? That was JPMorgan’s Marcelo Santos, a man who clearly knows his Brazilian e-commerce. He upgraded the stock to “overweight.” A perfectly sensible thing to do. But the subsequent stumble? That’s where things get… interesting. It’s like a vaudeville routine, really. The setup is solid, but the punchline is a bit… soggy.

JPMorgan Loves MercadoLibre (and Who Doesn’t?)

Santos, bless his heart, points to Shopee – that Southeast Asian upstart owned by Sea Limited ([SE 6.17%]) – finally starting to charge what things actually cost. They’re taking a bigger “take rate” – fancy Wall Street speak for “we’re not giving everything away for free anymore.” Apparently, Shopee’s been muscling in on MercadoLibre’s turf in Brazil. A bit like a particularly aggressive game of shuffleboard, if you ask me. And now, it seems, the free-for-all is… moderating. Amazon ([AMZN 2.57%]) is still a player, but a relatively small one in this particular fiesta. They’re probably busy delivering books to igloos.

Santos predicts a good pace of growth – over 30% in Brazil by late 2025. A bold claim! I like it! It’s the kind of optimism that keeps macro strategists employed. And keeps us all caffeinated. He figures this will help them hit analyst targets in 2026. Targets, shmargets. The market has a mind of its own. It’s like trying to herd cats… wearing tiny sombreros.

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Is MercadoLibre Stock a Buy? (Or a Sell? Or Maybe Just a Hold?)

So, the question, dear readers, is this: Is this a stock worth your hard-earned cash? Santos slapped a $2,800 price target on it, implying a 30% upside. Ambitious, I say! But does the logic hold water? Well, Shopee’s finally realizing that you can’t build a business on good intentions and free shipping. They’re actually taking a cut of each transaction. Imagine that! A revolutionary concept!

This means MercadoLibre’s rival isn’t sacrificing profit margins for market share… or at least, not as aggressively as before. And that, my friends, gives MercadoLibre some breathing room. Their operating margin has taken a bit of a hit – down 260 basis points over two years. A tragedy! A true tragedy! But if they can maintain a 12% margin – enough to generate $8.6 billion in free cash flow – and keep the price-to-FCF ratio under 12… well, then, it looks like a buy. And frankly, it shouldn’t be going down. Unless, of course, the entire Brazilian economy decides to take a siesta. Which, let’s be honest, is always a possibility.

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2026-02-12 20:03