This report is an updated version of the report published on 11 November 2022 at 6:37 AM (PDT)

MercadoLibre, Inc.

MELI Details

MercadoLibre, Inc. (NASDAQ: MELI) operates the largest online commerce and payments ecosystem in Latin America. It provides its users with online commerce and payment tools through its online commerce platform and related services.

Financial Results for 3Q’FY22

• The company reached a new record in total revenues of ~$2.7 billion, primarily driven by the Commerce business, partially nullified by the decrease in Fintech business due to a higher mix of more prominent merchants in TPV.
• The quarterly EBIT stood at $296 million, with the operating margin growth to 11.0% in Q3’FY22, highlighting sustainable and profitable growth.
• The company surpassed 40 million unique active users in fintech, and all geographic segments contributed to the growth momentum.

Outlook

MELI's excellent execution, growth opportunities, and strategic investments have placed the company in a better position going ahead. Further, it intends to democratize eCommerce and financial services in Latin America through its continued growth momentum.

Key Risks

The company’s business is subject to the laws, rules, regulations and policies of the countries it operates. Failure to comply with the rules and regulations could adversely affect the operations.

Valuation Methodology: EV/EBITDA Based Relative Valuation (Illustrative)

Stock Recommendation

Over the last one month, the stock has given a return of ~34.85%.

The stock has been valued using EV/EBITDA multiple-based illustrative relative valuation, and the target price so arrived reflects a fall of low double-digit (in % terms). A slight discount has been applied to EV/EBITDA Multiple (NTM) (Peer Average), considering macro environment and trading levels.

Considering the resistance and target level achievement, current trading levels and risks associated, it is prudent to book profits at the current levels. Hence, a ‘Sell’ rating has been provided on the stock at the closing price of USD974.89 per share, up by 4.21% as of 11 November 2022.

Technical Overview:

Daily Price Chart

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

MercadoLibre, Inc. (MELI) is a part of Kalkine’s Global Big Money Product

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for share price chart is based on November 11, 2022, and all other data such as stock price performance as of November 15, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.