MercadoLibre shares soar almost 14% after recording record income

The net income of the e-commerce business increased by 23% year-on-year, reaching US$1.4 billion, driven by the strength of its marketplace, the expansion of its digital advertising business and the 41 million unique buyers in the quarter. Shoppers maintained their activity levels on the platform strong, generating notable growth in the number of items per shopper compared to the previous quarter.

For its part, the net income of its fintech Mercado Pago grew by 112.5% ​​in the last 365 days, reaching US$1.2 billion, and surpassing the US$1 billion mark for the first time, with a rebound of financial services in the ecosystem. During the second quarter, Mercado Pago exceeded 38 million active users, an increase of 26.3%and with growth in all the markets of the region, mainly in the services of payments via QR code, transfers within the platform and users who requested credit.

“We saw a strong quarter across all businesses, reflecting continued improvement in profitability with record results in net income and gross profit. As a consequence of this consistent performance, we remain firm in our purpose of expanding access to trade and financial services”assured pedro arntChief Financial Officer of Mercado Libre.

With respect to the total value of the items traded on the marketplace, it was US$8.6 billion in the second quarter, an increase of 21.8%.

What analysts highlight and expect

Agustin Trucco, Vice President of LDT Brokers, assessed that “Mercado libre continued to grow strongly in the last year, even accelerating the pace of sales in previous quarters. The company is worth about five and a half times in the market in relation to its sales, and measured on sales it is close to the lowest prices in its history.”

“Revenue was up 52.5% to $2.6bn from a year earlier and analysts were expecting $2.5bn. Quarterly earnings were $2.43 per share for the quarter ended. in June, 35.34% more than expected and 77% more than the same quarter of 2021”, he added.

It is worth noting that the point of a excessively low price of the company’s shares in relation to its incomeit can represent an asset with a lot of potential as it is undervalued in the market, specialists agree.

Maximilian DonzelliHead of research for Invest online, stated that “It is worth noting that the company’s fintech segment increased by 26% in terms of unique active users, since it occurred in a global scenario of economic slowdown, and where several of the most important technology companies reported Huge drops in active users and average revenue per user.”

This driver, which refers to the segmentation of the company’s business, can be considered to account for the degree of efficiency that it has had in differentiating itself from the competition and strengthening its leadership in the fintech sector in the region.

In addition, the economist indicated that “one cannot fail to mention the rapid rate of growth maintained by the Mercado Pago division, which reached a volume of transactions that exceeded US$30,000 million (record for the company), reflecting in this way an increase of approximately 84% compared to the same quarter of the previous year”.

In this sense, it is relevant to highlight how the firm has notably increased its payment sector, with a customer-based experience that optimizes the way in which disbursements made by users in any type of activity are facilitated.

As for the expectations of the stock in the coming days, Lucas Caldi, Leader of Corporate Research in PPI, indicated that “We like paper, it is in our recommended portfolio. We see it as a very attractive growth asset. However, like all growth actions, they are very sensitive to what happens with the global interest rate. The 10-year rate fell to 2.70% and that helps these types of companies. Powell announcing that the Federal Reserve has already reached the neutral rate as well, but if inflation becomes more persistent and forces the FED to remain very restrictive, it may negatively affect the price of the paper during the second half.

In this sense, MELI’s quotes could benefit even more, if the macroeconomic context begins to work in a scenario in which the US policy moves towards interest rates that remain consistent with the promotion of global growth.

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