MercadoLibre Stock Is Down 19% This Year. Should You Sell It? (Hint: Zero Wall Street Analysts Rate It a Sell)
Key Points
MercadoLibre is reporting growth like a start-up.
Profitability is down as it invests in laying the groundwork for the future.
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MercadoLibre (NASDAQ: MELI) stock is down 19% this year, but amid market disappointment, Wall Street is still confident in the stock. Out of 26 covering analysts, 85% rate it a buy, while 15% have it as a hold.
Should you go with Wall Street, or sell MercadoLibre?
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The opportunity to buy on the dip
Despite what its sagging stock might suggest, MercadoLibre is still in high-growth mode. Management pointed out that even though it's several decades old, the company is still expanding like a young start-up. It's the leader in e-commerce in the 18 countries where it operates, and it's a major player in fintech. In the 2026 first quarter, revenue increased 46% year over year (currency neutral), with a 36% increase in gross merchandise volume and a 55% increase in total payment volume.
Image source: Getty Images.
The stock is down because profitability is down. Operating income fell from $763 million to $611 million year over year, and operating margin dropped from 12.9% to 6.9%.
There were two main contributing factors. One is investments in the business. The other is pressure on the credit business from new customers. Both of these are, in fact, positive developments for the business long-term. What makes it more compelling is that the company has been in this situation before and managed through it successfully, and it's already an established powerhouse that's profitable, which should reassure investors.
Not only would I not recommend selling MercadeLibre stock, but I would say this is an excellent opportunity to buy a fantastic stock on the dip.
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Jennifer Saibil has positions in MercadoLibre. The Motley Fool has positions in and recommends MercadoLibre. The Motley Fool has a disclosure policy.
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