On May 7, MercadoLibre reported the fastest revenue growth it had seen in almost four years. The stock fell about 12.7% the next day.
That’s the market for you. And it may also be the opportunity.
MELI now sits roughly 37% below its 52-week high of about $2,645. At around $1,800, the stock is trading below where most institutional models had it valued before the selloff even started. Meanwhile, the business — the actual operating business — is doing something most companies would celebrate.
What the Numbers Actually Say
Q1 2026 net revenues & financial income came in at $8.845 billion, up 49% year-over-year. Total Payment Volume reached $87.2 billion, up 50% year-over-year. Gross Merchandise Volume hit $19.0 billion, up 42%.
Those are not the numbers of a company in distress.
So why did the stock collapse? Operating margin came in at 6.9%, down 600 basis points from the prior year. EPS of $8.23 missed consensus estimates (the size of the miss depends on the data source), and that’s what moved the stock sharply lower — despite 49% revenue growth.
The part of the story that matters more: management did not accidentally compress margins. They did it on purpose. MercadoLibre is in the middle of a deliberate investment cycle — building out 14 new fulfillment distribution centers across Brazil in 2026 alone, a roughly 50% increase in that footprint. It acquired logistics assets from Brazilian delivery company Loggi in the states of São Paulo and Rio de Janeiro in April. It also issued 2.7 million credit cards in the quarter, with the credit portfolio nearly doubling year-over-year.
When a fintech scales its credit book this fast, accounting rules force it to book loan-loss provisions upfront against loans that haven’t yet seasoned. Reported profit takes the hit today. Interest income arrives over the life of the loan. The market is reading one line on the income statement and calling it a broken business. It may not be.
The Bigger Picture in Latin America
What’s interesting is just how early this story still is. MercadoLibre has 84.1 million unique active buyers and 82.9 million fintech monthly active users — but the region’s digital financial infrastructure is still being built in real time.
The company also says it has been investing heavily in AI and infrastructure, including improving search and discovery and the broader commerce experience across Latin America.
From 2025 to 2028, analysts still expect strong growth. But the exact consensus CAGR figures, the exact number of analysts, and a specific current consensus price target vary materially by source and change over time.
Where the Disagreement Lives
Bulls, including Jefferies, who upgraded to Buy in April with a $2,600 target, argue that margin compression has pushed the valuation down while the investment is clearly accelerating revenue. UBS took the other side, downgrading to Neutral in late April and cutting its target to $2,050.
Both sides are looking at the same data. The disagreement is entirely about timing.
Q2 2026 earnings are expected around August 5 (a provisional date per MercadoLibre’s investor relations calendar). That report will likely settle a significant portion of this debate. Watch two numbers: Brazil growth trends, and whether operating margin shows any sequential stabilization. If the growth rate holds and margin improves even slightly, the bear case loses its core argument.
The valuation picture has quietly shifted. But specific point-in-time multiples (like a precise NTM EV/Revenue figure) and precise free-cash-flow yield comparisons are not consistently verifiable across public sources without locking to a specific model definition and date.
That math is worth sitting with.
