Down 29%, Is MercadoLibre Stock a Better Buy Than SpaceX and the "Magnificent Seven" Stocks in August?

In recent trading sessions, high-profile stocks like Space Exploration Technologies, known as SpaceX, have cratered, and large run-ups and massive capital expenditures (capex) cast doubt on many of the so-called "Magnificent Seven" names.

Knowing that, investors may want to seek opportunities in other industries. One place to look might be outside the U.S., specifically at Latin American e-commerce giant MercadoLibre (NASDAQ: MELI). Although the consumer discretionary stock may not be well known to many American investors, it offers an opportunity for growth outside of the usual names.

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Turning to MercadoLibre

Investors are likely looking for an alternative, as the investment case for SpaceX may not be as clear-cut. Although its revenue rose 54% year over year in the first half of 2026, its massive losses continued to widen. This has occurred as the supply of SpaceX shares is on track to keep rising, potentially depressing the stock price.

Also, other than Nvidia, the rest of the Magnificent Seven are either tied to the beleaguered software industry or have spooked investors with massive capex.

MercadoLibre faces none of these issues. It prospered by being a first mover in the Latin American e-commerce space. This posed challenges for the developing world that Amazon did not face, and MercadoLibre responded in a way that strengthened it.

Since most of its customers were outside the financial system, the company formed Mercado Pago to offer digital payment products. Also, due to a comparative lack of fulfillment and shipping options, Mercado Envios was created to package and move merchandise more quickly.

However, the state of its primary businesses may have contributed to the 29% decline in the stock price. Competitors like Amazon and others made inroads, forcing MercadoLibre to reduce its margins to bolster its competitive edge. Additionally, the expansion of Mercado Pago into lending led to more loans going bad, forcing it to incur loan losses.

Fortunately, the company's response could increase long-term growth. Lower margins make it more difficult to compete with MercadoLibre, and the company can offset lower profits by accelerating growth. Moreover, Mercado Pago responded to financial challenges by using AI to evaluate its customers' finances.

The pace of revenue growth should offer comfort to investors. In the first half of 2026, revenue of $19 billion rose 50% compared to year-ago levels. Still, the aforementioned challenges meant that the $883 million in net income in the first two quarters of 2026 fell 13% over the same period, a likely cause of the stock's struggles.

The revenue growth should become the engine of the stock's recovery. Also, assuming the company can profit from its sales and marketing spending and reduce the percentage of bad loans, MercadoLibre could soar if profit growth matches or exceeds its revenue growth.

Investing in MercadoLibre

Admittedly, Latin America has a difficult business environment, and the falling net income may seem discouraging. However, MercadoLibre is a potentially attractive alternative to megacap tech stocks. The company's mitigation strategies mean its growth engines should spur rapid profit growth in the long term. That could lead to significant increases in the stock price independent of the U.S. tech industry.

Will Healy has positions in MercadoLibre. The Motley Fool has positions in and recommends Amazon, MercadoLibre, and Nvidia. The Motley Fool has a disclosure policy.