How Investors Are Reacting To MercadoLibre (MELI) Balancing Rapid Revenue Growth With Margin Pressures

• MercadoLibre reported its second quarter 2025 earnings, posting strong revenue growth to US$6.79 billion from US$5.07 billion a year earlier, while net income edged slightly lower at US$523 million compared to US$531 million.
• An especially interesting insight is the company's robust commerce and fintech expansion was accompanied by higher marketing spend and adjustments to its free shipping policy in Brazil, which affected short-term profitability.
• We'll explore how this mix of accelerated revenue growth and margin pressure could shape MercadoLibre's longer-term investment narrative and growth potential.

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MercadoLibre Investment Narrative Recap

To own shares of MercadoLibre, an investor must believe in the company's ability to deliver robust growth across Latin America's commerce and fintech sectors, even as it faces margin pressure from scaling investments. The latest quarterly report, with rising revenues but slightly lower net income, does little to change the fundamental short-term catalyst, continued user and transaction growth, while the key risk remains the potential for higher credit losses as MercadoLibre's financial services expand in volatile regions. For now, the impact of increased marketing spend and changes to free shipping appear manageable rather than material to these drivers.

One recent announcement that ties directly to these financial results is MercadoLibre's commitment to significantly increasing investment in Brazil, focusing on logistics, technology, and marketing. This push supports the main catalyst of higher revenue and user engagement, but it also speaks to the balancing act between fueling growth and managing costs, especially important as Brazil remains a major contributor to both opportunity and risk following the company’s recent shipping policy changes.

But while revenue keeps climbing, investors should be mindful of how rising fulfillment and shipping costs could impact margins if scale benefits don't materialize as expected...

Read the full narrative on MercadoLibre (it's free!)

MercadoLibre's narrative projects $45.5 billion in revenue and $5.3 billion in earnings by 2028. This requires 23.6% yearly revenue growth and a $3.2 billion increase in earnings from $2.1 billion today.

Uncover how MercadoLibre's forecasts yield a $2848 fair value, a 21% upside to its current price.

Exploring Other Perspectives

Fair value estimates for MercadoLibre from the Simply Wall St Community span from US$1,398 to US$3,406 across 29 individual forecasts. With margin pressure now top of mind for analysts, these diverse views show just how differently investors may weigh growth versus profitability when shaping their own expectations.

Explore 29 other fair value estimates on MercadoLibre - why the stock might be worth as much as 45% more than the current price!

Build Your Own MercadoLibre Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your MercadoLibre research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
• Our free MercadoLibre research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate MercadoLibre's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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