MercadoLibre Stock Dips After Q3 Earnings Miss – Can Brazil Deal Ignite a Rally?

Key Facts: – Share Price: MELI trades around $2,290 (Oct. 28 close), about 20% up year-to-date ^[1]; market cap ≈$115–116B ^[2]. – Q3 Results: Revenue ~$7.41B (+39% YoY) beat estimates ^[3], but net income $421M (+6% YoY) fell short of forecasts ^[4] (EPS ~$8.32 vs. est ~$9.37 ^[5]). – New Deals: In late Oct., MercadoLibre struck a partnership to sell Brazilian retailer Casas Bahia’s appliances on its platform from Nov. 2025 ^[6] (“huge synergy,” said CEO Fernando Yunes ^[7]). The company also entered Brazil’s online pharmacy market via a drugstore acquisition ^[8]. – Analyst Views: Wall Street is largely bullish – 15 of 17 rate MELI a Buy ^[9]. 12-month consensus target ~ $2,800 (21% above current) ^[10]. Benchmark and Wedbush reaffirmed Buy (targets ~$2,935 and $2,700) ^[11] ^[12]. – Macro & Market Trends: Brazil’s inflation (~5.2% annually) and 15% interest rate remain high ^[13], while Argentina faces ~32% inflation ^[14] and currency swings. Latin America e-commerce is booming (projected to grow from $1.45T in 2024 to $3.26T by 2033 ^[15]), but local economic volatility pressures short-term demand ^[16] ^[17].

Stock Price Performance

MercadoLibre (NASDAQ: MELI) has been volatile in October. After peaking near $2,500 in late September, the stock fell sharply on Oct. 15 (dropping ~5% to ~$2,048 intraday) amid tech-sector selloff ^[18]. By Oct. 27, MELI had “stabilized near $2,160” – still about 10–15% below its late-2024 high ^[19] ^[20]. As of Oct. 28 close, shares were around $2,290 ^[21] ^[22], up roughly 20% so far in 2025 ^[23]. (For context, that YTD gain translates to about 11% above its price one year earlier ^[24].) In after-hours trading on Oct. 29 (post-earnings), the stock dipped ~1.6% ^[25]. Overall, MELI’s price is still well below its all-time peak (~$2,645) but far above pre-pandemic levels – it’s roughly a 78-bagger since its 2007 IPO ^[26].

Q3 2025 Earnings Highlights and Reaction

MercadoLibre reported Q3 results on Oct. 29. It beat top-line estimates: revenue was about $7.41 billion (up ~39% YoY), versus ~$7.19B consensus ^[27]. However, earnings lagged forecasts: net income was $421M (≈+$0.99 per share GAAP) ^[28], missing the ~$481M analysts expected ^[29]. On an operating basis, profit margins compressed to 9.8%, the lowest since late 2023 ^[30]. Management noted that heavy spending on growth (especially free-shipping promotions in Brazil) weighed on short-term profits. CFO Martín de los Santos reiterated that these costs are “intentional short-term trade-offs,” adding “we are very optimistic about the long-term trajectory of our profitability.” ^[31].

Investors reacted mildly. In after-hours trading immediately post-earnings, MELI stock fell ~1.6% ^[32]. However, trading was not panicked – the company’s commerce GMV still grew strongly (~+28% to $16.5B) and MercadoPago TPV rose ~41% YoY to $71.2B ^[33]. Notably, the number of unique buyers in Brazil jumped 29% YoY, the fastest pace since early 2021 ^[34], thanks largely to its free-shipping incentive. As one shareholder letter put it, “Unique buyers in Brazil grew 29% YoY in Q3’25… surpassing even the pandemic peak” ^[35]. Operating income was $724M (margin 9.8%) ^[36], and the fintech arm saw its loan portfolio swell ~83% to $11B ^[37] (while defaults remained low). In short, revenue growth remains robust, but high growth investments hurt near-term EPS.

Strategic Expansions: Brazil Partnership and New Markets

Beyond earnings, MercadoLibre has been making strategic moves to fuel growth. On Oct. 23, it announced a partnership with Casas Bahia, a leading Brazilian retailer of appliances and electronics ^[38]. Starting November, Casas Bahia will sell its merchandise on MercadoLibre’s marketplace. This partnership fills a gap – historically MercadoLibre had weaker inventory in large home appliances, and Casas Bahia gains access to MercadoLibre’s online customer base. MercadoLibre’s Brazil head, Fernando Yunes, said he “sees a huge synergy in the move,” given Casas Bahia’s scale in appliances ^[39]. Santander analysts agreed, calling it a “win-win situation, given the complementary value proposition of each company” ^[40]. The market responded positively: MELI shares ticked up ~0.6% on the news ^[41].

Earlier in October, MercadoLibre also entered Brazil’s online pharmacy market. It acquired a local drugstore (a regulatory requirement) and plans to let other pharmacies sell on its platform ^[42]. “The pharmaceutical sector is the only one in Brazil that we do not operate in… We want drugstores selling on MercadoLibre,” explained Yunes ^[43]. This move, and a rollout of a new B2B wholesale platform across multiple countries ^[44], extend MercadoLibre beyond consumer retail into high-growth segments. All told, these initiatives aim to drive future growth even as they require heavy upfront investment ^[45] ^[46].

Analyst Forecasts and Commentary

The financial community remains largely optimistic on MELI’s long-term outlook. Most analysts maintain Buy/Outperform ratings. For example, TS2 noted that Wedbush reaffirmed an Outperform rating with a $2,700 price target ^[47], and the consensus 12-month target is about $2,800 ^[48]. MarketBeat data shows an average analyst target of ~$2,799 (implying ≈21% upside) ^[49]. In late Oct. Benchmark reiterated its Buy and a ~$2,934 target ^[50]. Across the board, 15 of 17 polled analysts rate MELI a Buy ^[51] (only 2 Holds, no Sells).

Analysts acknowledge the growing pains. JPMorgan (which is more cautious) cut its MELI target to $2,600, warning that intensifying competition and free-shipping promos in Brazil will pressure margins. Nevertheless, many emphasize that MercadoLibre’s fundamentals remain strong. Santander’s research, for example, argued recent “hiccups should be limited” and do not derail the long-term growth story ^[52]. In TS2’s words, recent volatility is seen as “short-term noise rather than a fundamental crack” in MercadoLibre’s narrative ^[53]. As one Motley Fool contributor summarized (prior to Q3), MELI is “still expanding at a pace that most global tech companies would envy,” with 34% revenue growth in Q2 and surging fintech adoption ^[54].

Latin America & Fintech Market Trends

MercadoLibre’s prospects are tied to broader Latin American economic and tech trends. The region’s e-commerce market is expanding rapidly – projected to nearly double from $1.45 trillion (2024) to $3.26T by 2033 (CAGR ~10.8%) ^[55], fueled by rising internet/mobile penetration and a growing middle class. Similarly, digital finance is booming: MercadoLibre’s fintech arm, Mercado Pago, has over 72 million monthly users and saw its credit portfolio double in recent years ^[56] ^[57]. Financial services (payments, BNPL, credit) are key growth engines across Brazil, Mexico and Argentina.

However, significant headwinds remain. Brazil, MELI’s largest market, still wrestles with high inflation (about 5.2% annual as of Sept. 2025 ^[58]) and has its benchmark interest rate at a 20-year high (15%). Argentina’s economy is highly volatile: inflation runs around 30% annually ^[59], the peso swings, and political uncertainty is high. Such conditions can dampen consumer spending and translate to currency losses on U.S. Dollar–based revenue. In fact, TS2 observes that macro uncertainties (inflation, weak currencies, rising rates) have been a bigger driver of MELI’s recent swings than any single corporate news item ^[60]. Regional competition is fierce too: Amazon, Sea’s Shopee and others are aggressively cutting prices and expanding free-shipping in Brazil ^[61] ^[62], which forces MercadoLibre to match deals and invest heavily.

Technical and Fundamental Analysis

From a technical standpoint, the stock’s momentum is still positive. MELI trades above its key moving averages (the 5-, 50- and even 200-day SMAs) ^[63], and most momentum indicators are bullish. For example, Investing.com’s technical summary rates MELI as a “Strong Buy” (with 9 of 10 indicators bullish) ^[64]. The 14-day RSI is around 65 (neutral-to-bullish), and the MACD is in buy mode ^[65]. These signals suggest the recent pullback may have been a healthy correction rather than a new downtrend.

Fundamentally, MercadoLibre remains a high-growth but high-spending company. It currently trades at a rich valuation (recent estimates put its P/E around 50-60x next year’s earnings ^[66]). Profit margins are relatively thin – Q3 operating margin was <10% – because the company is plowing money into growth. Indeed, management plans to invest roughly $13 billion in 2025 capex, a ~38% increase over 2024 ^[67], to build logistics hubs and technology. These investments should boost long-term scale, but they increase short-term costs. On the plus side, MercadoLibre’s balance sheet and cash flows remain solid, and it continues to generate strong revenue growth. Its fintech business is particularly profitable: by mid-2025, the credit portfolio hit ~$9.3B (growing ~91% YoY) ^[68] with historically low default rates.

Overall, while the stock is near all-time highs and already reflects lofty expectations, many analysts believe there is room to run. If MercadoLibre can sustain growth while eventually improving margins, the consensus sees ample upside. As TechStock² summarizes: even after recent dips, the stock is “up approximately 20% for the year” ^[69] and has a “sustained growth trajectory.” The new Brazil partnerships, continued fintech expansion, and strong Latin American e-commerce fundamentals underpin that confidence. Investors will be watching whether these trends will outweigh the hefty spending and macro challenges – and which way the stock moves next.

Sources: Authoritative news and analysis sources including Reuters, Investing.com, TS2.Tech, Nasdaq.com (Motley Fool), MarketBeat, and others ^[70] ^[71] ^[72] ^[73] ^[74] ^[75]. All key data and quotes are cited inline.

MercadoLibre Expands into Pharma and Food

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