MercadoLibre (NASDAQ:) is the most comprehensive ecommerce ecosystem in Latin America in terms of unique visitors and page views.

The company has strong presence in Brazil, Argentina and Chile. Through its marketplace platform, the company allows people to trade and buy goods in all regions of Latin America.

The company also offers fintech services, including advertising, loan financing, e-store set up, and marketing solutions.

The company has been called the Amazon of Latin America (NASDAQ:) due to its diverse operations and expanding e-commerce business model.

Stocks have risen by 63.3% in the last year and there could be more upside. There are still risks, but the upside potential does not appear to be a buy opportunity. I remain neutral about the stock. (See MELI stock charts on TipRanks)

Rapidly Growing Results

In Q2 2021, MercadoLibre’s gross merchandise value grew 46% in local currency to $7 billion. There were 244 million items sold through the platform. This quarter saw $1.7 billion net revenue, an increase of 102.6% year-overyear.

MercadoLibre continues to grow strongly, showing little or no sign of slowing.

In terms of its fintech business, total payments volume (TPV), increased 72% year over year to $17.5billion, and credit originations rose by $703m, an improvement of 429%.

These numbers are impressive for a large company, with a $84 billion market cap. MercadoLibre’s payments solutions show great potential. The company’s solutions match that of PayPal (NASDAQ :), but they don’t have to be restricted by MercadoLibre. In Q2, 60% of TPV was generated outside of MercadoLibre’s e-commerce platform.

As its fintech ecosystem expands, MercadoLibre will also offer investment accounts that should help to boost the company’s finances. The company now has more than 19,000,000 customers using its asset management software.

Because Latin America’s population is significantly underbanked, MercadoLibre could be the leader in Latin America. Brazil’s adult population is less than 10% without access to a bank account. The number of bank accounts in Argentina is less than half the adult population. The company has a huge untapped market to tap.

Valuation And Risks

MercadoLibre is currently trading at around 13 times its forward sales, which is not a crazy-high multiple considering its ongoing expansion.

Analysts estimate that the company’s FY2025 net revenue is 28 times. This seems like a fair pricing estimate.

There are risks that should not be overlooked. First, foreign exchange rates. MercadoLibre’s revenue is subject to various Latin American currencies which can be very volatile. Investors from the United States also have to convert to USD to get their final results.

Latin America, as a whole, poses greater business environment risk than the rest of the globe due to its emerging position among the stronger global peers.

Wall Street’s Take

Turning to Wall Street, MercadoLibre has a Strong Buy consensus rating, based on nine Buys, zero Holds, and zero Sells assigned in the past three months. At $1,998.89, the average MELI price target implies 18.8% upside potential.

Disclosure: Nikolaos Sismanis didn’t hold any position in the securities discussed in this article at the time it was published.

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