Key Takeaways
- Capital Research Global Investors expanded its MELI holdings by 22.5% during Q4, acquiring 408,939 additional shares to total 2,225,031, worth approximately $4.48 billion.
- Hedge funds and institutional investors collectively hold 87.62% of MercadoLibre’s outstanding shares.
- First-quarter revenue surged 49% compared to the prior year, reaching $8.85 billion and exceeding projections, while EPS came in at $8.23 versus the $8.75 consensus forecast.
- Board member Alejandro Nicolas Aguzin purchased 600 shares at $1,655.93 per share in May, expanding his personal stake by 12.62%.
- Wall Street maintains a Moderate Buy rating with a consensus price target of $2,255.33, despite multiple firms adjusting their outlooks downward post-earnings.
Shares of MercadoLibre (MELI) began Friday’s session at $1,607.80, reflecting a 1.7% decline and trading significantly beneath the 52-week peak of $2,645.22. The stock currently sits below both its 50-day moving average of $1,720.81 and its 200-day moving average of $1,887.84.
Capital Research Global Investors emerged as the most notable institutional player in recent filings. During the fourth quarter, the investment firm boosted its MELI stake by 22.5%, acquiring an additional 408,939 shares. This expansion brought the firm’s total position to 2,225,031 shares valued at approximately $4.48 billion, making the e-commerce giant its 24th largest portfolio holding at 0.8% of total assets.
Several additional institutional players also expanded their positions throughout the same period. Hardy Reed, Rothschild Investment, Interchange Capital Partners, Cornerstone Select Advisors, and Mitchell Capital Management each registered modest position increases. Combined, institutional investors and hedge funds now control 87.62% of the company’s equity.
Regarding insider activity, Director Alejandro Nicolas Aguzin acquired 600 shares on May 22nd at an average cost of $1,655.93 per share, totaling approximately $994,000. This transaction increased his personal holdings to 5,355 shares, currently valued at over $8.8 million.
First Quarter Performance: Strong Revenue Growth, Earnings Fall Short
MercadoLibre unveiled its first-quarter financial results on May 7th. The company generated $8.85 billion in revenue, representing a 49% year-over-year increase and surpassing the Street’s $8.29 billion projection. The top-line performance demonstrated continued robust growth.
Earnings per share, conversely, disappointed investors. The Latin American e-commerce leader posted $8.23 EPS, falling short of the $8.75 consensus estimate by $0.52. This figure also represented a decline from the $9.74 EPS reported in the same quarter last year.
The company currently maintains a return on equity of 29.58% and operates with a net margin of 6.04%. Wall Street analysts project full-year EPS of $40.97. MELI trades at a price-to-earnings ratio of 42.43, with a PEG ratio of 0.99.
Wall Street Revises Price Targets Following Results
The earnings shortfall triggered several analysts to recalibrate their price targets, though most maintained constructive stances on the stock.
JPMorgan reduced its target from $2,100 down to $1,900 while maintaining a neutral stance. UBS trimmed its outlook from $2,050 to $1,750, also remaining neutral. Morgan Stanley adjusted downward from $2,600 to $2,450 but preserved its overweight recommendation. Goldman Sachs established a $2,100 price target. Daiwa downgraded the stock from buy to hold while setting an $1,800 target.
Among 18 analysts tracking MercadoLibre, one assigns a Strong Buy rating, eleven recommend Buy, five rate it Hold, and one maintains a Sell rating. The average consensus price target stands at $2,255.33 — representing potential upside of approximately 40% from current trading levels.
MercadoLibre commands a market capitalization of $81.52 billion, maintains a current ratio of 1.16, and carries a debt-to-equity ratio of 0.63. The stock’s one-year low sits at $1,495.00.
