MercadoLibre shares plunge 16% after unveiling balance sheet that missed expectations

With offices in 18 Latin American countries, Free market The company has been a leader in the e-commerce and digital finance industry in the region for 25 years. Market participants always expect quarterly results to be reported, given the company’s weight among Argentina’s listed companies: it almost alone represents the value of all the others added together.

This Thursday Shares of Mercado Libre fell 16.2% to $1,774.05 on Wall Street.after presenting its third-quarter 2024 balance sheet at the close of trading on Wednesday. This means falling market capitalization of the company is about 18,000 million US dollars that day is now $89.94 billion.

First of all, recorded revenue was US$5,312 million.what does it mean 35% YoY Growth and this figure is 1% higher than market analysts’ estimates. Of this amount, the majority comes from services and financial income ($4.76 billion). One by one, Net income rose 10% year-on-year to $397 million.a significant bet, but one that did not meet investors’ expectations.

Maximiliano DonzelliHead of Investment Strategies at IOL (InvertirOnline), noted that “the company’s performance missed Wall Street estimates, beating market expectations for revenue, which was $5.312 million (+35% year over year) versus expectations of $5.282 million.” but did not achieve grades in EPS (earnings per share) no volume sold. The EPS of the company founded by Marcos Halperin was $7.83 (+9% YoY) on a $9.85 valuation.”

Mercado Libre can be described as an e-commerce intermediary of Argentine origin based in Uruguay. It is present throughout the region and has an ecosystem of several integrated e-commerce services: Mercado Libre Marketservice Advertisements from Mercado Libre, a payment solution Payment marketfinancial solutions Credit marketlogistics solutions Merchandise deliveries including delivery, advertising platform Advertising market and digital storefront solution Mercadoshops.

As for active users, The number of Mercado Libre customers has reached 61 millionwhile Mercado Pago’s monthly customers were around 56 million. Year-on-year growth was 22% and 33%, respectively.

“He fintech segment took a hit as the company’s strategy focused on achieving greater user penetration with products with lower financial margins. This is reflected in the growth of the loan portfolio, which increased by 77% compared to the same period last year and amounted to USD 6,016 million. The total volume of payments amounted to 50.7 billion (+73% compared to last year). In terms of MAUs (monthly active users), they grew year-over-year by 35% to 56.2 million, driven by Brazil, Mexico and Argentina,” Donzelli explained.

On the other hand, Mercado Libre reported that Total payment volume for the quarter was $50.691 million, up 34%. than in the same period last year. Meanwhile, gross merchandise value increased 14% year over year to $12,907 million. The local company also reported that it sold a total of 456 million products and made 453 million deliveries. In the previous cycle, these figures were 357 million and 350 million, respectively.

“The gross product amounted to $12.9 billion (+14% compared to last year) with an estimate of $13 billion. A total of 455.9 million units were sold, which corresponds to an increase of 28%. Continuing this line, the segment e-commerce stood out with growth of 48%, generating revenue of US$3.1 billion, with strong performance in Brazil and Mexico and a recovery in Argentina,” said the IOL expert.

According to data from AdCap Financial GroupMercado Libre shares were already among the “worst performing stocks” since October, with a monthly loss of 0.7% when capital Argentina was mostly bullish.

However, financial analysts continue to find great value in Mercado Libre as the company continues to expand in the solutions segment, increasing market penetration in Latin America, as evidenced by strong growth rates in its core business verticals.

Donzelli emphasized that “if we annualized earnings per share, Mercado Libre would trade at Price/earnings (Earnings on price) future 62approximately. Although it is high, given the exponential growth of the company, the large growth of the fintech segment and the long-term vision of management, “We remain optimistic”. The price earnings ratio (P/E) is a stock market indicator that allows you to know the amount of dollars the market is willing to pay to produce one dollar of a company’s earnings.

“We understand that Mercado Libre’s bottom line has been impacted by the expansion of its fintech segment (through lower margins and higher loan portfolio) and the achievement of greater synergies and adoption in the remaining segments. In our view, the fintech segment has contributed to increased flows into the rest of its segments; e-commerce, advertising, delivery,” said the IOL analyst.

Last month Mercado Libre signed agreement with SAP combine artificial intelligence solutions and the RISE platform with SAP to improve the company’s technology infrastructure and provide efficient and secure solutions to millions of users.

“By implementing RISE with SAP and AI capabilities, we are creating a robust and scalable technology platform that will allow us to flexibly respond to the demands of an ever-evolving market. This solution will allow us to offer personalized solutions to millions of users, expanding our product and service offering and strengthening our position as market leader in the region,” he noted. Derek Dougall Senior Director, Mercado Libre Systems.