MercadoLibre (NasdaqGS:MELI): Rethinking Valuation After B2B Expansion and Surging User Growth

If you’ve been watching MercadoLibre (NasdaqGS:MELI) lately, there’s a new development that could shape your next move. The company has just rolled out a business-to-business unit designed to go after the corporate e-commerce segment across Latin America. This isn’t just a side project; B2B e-commerce volumes are estimated to dwarf consumer sales, and MercadoLibre is now planting a clear flag in this space. At the same time, they reported another quarter of strong revenue growth, with daily active users climbing higher than most expected. It’s the kind of strategic expansion that signals management’s ambition to grab a larger share of the region’s digital economy.

These catalysts seem to have energized the stock. Over the past year, MercadoLibre has posted a gain of 17%, following a 39% jump year-to-date, even as momentum has cooled a bit in recent months. Beyond the numbers, the company continues to diversify: launching B2B, growing payment services, and seeing steady engagement on its platform. While short-term trading has been less spectacular, long-term holders know MercadoLibre’s habit of riding out volatility in pursuit of growth.

With the stock up significantly for the year and new markets in play, is there still a bargain left for investors, or is the market already pricing in all that future growth?

Most Popular Narrative: 15% Undervalued

According to the most widely followed narrative, MercadoLibre is seen as undervalued by 15%, suggesting that the current price may not fully reflect ambitious growth forecasts and planned margin expansion.

Rapid expansion of MercadoPago's user base and credit portfolio, supported by disciplined risk management and improvements in asset quality, positions the company to further capitalize on the increasing adoption of digital payments and financial services in the region. This is expected to drive growth in revenue and eventually lead to net margin expansion.

Curious how MercadoLibre’s growth machine could redefine its future value? The analyst calculations rely on a carefully engineered blend of margin improvement, operating leverage, and optimistic projections for payments, commerce, and advertising. Which bold financial forecasts are powering that higher price estimate? Read on to discover the narrative’s secret recipe for MercadoLibre’s potential upside.

Result: Fair Value of $2,893.88 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising credit risk in fast-growing markets and intense competition from rivals such as Amazon and Shopee could quickly challenge the bullish outlook.

Find out about the key risks to this MercadoLibre narrative.

Another View: The Industry Lens

But what happens if we shift to the industry’s price-to-earnings yardstick? On this measure, MercadoLibre screens as pricey compared to its global retail peers, which challenges the undervalued narrative seen earlier. Could this signal the market is already optimistic?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding MercadoLibre to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own MercadoLibre Narrative

If you’re unconvinced by these perspectives or want to dig deeper into the numbers, you can craft your own MercadoLibre narrative in just minutes: Do it your way.

A great starting point for your MercadoLibre research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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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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