Why MercadoLibre (MELI) Shares Are Plunging Today
What Happened?
Shares of latin American e-commerce and fintech company MercadoLibre (NASDAQ:MELI) fell 5.4% in the morning session after JP Morgan analyst downgraded the stock from Overweight (Buy) to Neutral. The analyst highlighted concerns relating to MercadoLibre's credit business, operational costs from logistical expansion, and projected tax rate increases.
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What The Market Is Telling Us
MercadoLibre’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 2 months ago when the stock gained 13.5% on the news that the company reported second-quarter earnings results. MercadoLibre blew past analysts' revenue expectations thanks to its better-than-anticipated GMV growth. Its EPS also beat Wall Street's estimates, and the company noted some of its investments from prior quarters were starting to pay off and solidify its leadership position. Zooming out, we think this was a fantastic quarter that should have shareholders cheering.
MercadoLibre is up 29.2% since the beginning of the year, and at $1,976 per share, it is trading close to its 52-week high of $2,140 from September 2024. Investors who bought $1,000 worth of MercadoLibre’s shares 5 years ago would now be looking at an investment worth $3,632.
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