Despite a six-fold surge in revenues and spectacular execution, Mercado Libre $MELI (-0,35%) stock has barely budged since 2021, leading to the paradox of what might be one of the market’s greatest disconnects between company growth and investor sentiment. This article dives deep into the numbers, business segments, and why today’s valuation may signal a historic opportunity.​

Business Model: Building an Unassailable Moat

Mercado Libre isn’t just “the Amazon of Latin America.” The company has methodically created its own moat with an e-commerce platform, digital payments, fintech innovations, and robust logistics that span the continent. Its strategic combination of marketplace (Amazon), fintech (PayPal), and merchant enablement (Shopify) is delivering rapid, compound growth across multiple verticals.​

• E-commerce revenue has grown at a CAGR of 49.1%, hitting $13.8B by mid-2025.​

• Fintech, the company’s second engine, exploded with a CAGR of 55.9%, reaching $10.3B over the same period.​

• Commerce and fintech together compound the competitive advantages, driving adoption and recurring user engagement at scale.

Explosive Financial Growth: Revenue and Free Cash Flow

The topline story is almost hard to believe: since 2021, total revenues have skyrocketed over 500%, from less than $2B to above $14B. The company’s “flywheel” dynamic is obvious; user growth, merchant growth, and platform engagement are all translating into higher transaction volumes and revenue.​

• Total revenues reached $24.1B LTM in June 2025, with a CAGR of nearly 40% since 2022.​

• Free cash flow per share, a critical profitability metric, surged 361% (CAGR: 74%) in the same period, signaling Mercado Libre’s ability to turn top-line expansion into bottom-line results.​

• The company’s strong financial discipline means reinvestment into new product launches while maintaining robust margins.

Valuation Paradox: Is Mercado Libre Critically Undervalued?

Yet the share price tells a different story. Since 2021, MELI stock is essentially flat (+2%), even as fundamentals have soared. This mismatch is starkly visible in forward EV/EBIT multiples:​

• The forward EV/EBIT ratio collapsed by 83.8%, from peaks above 300x to just 28.9x in 2025 (CAGR: -31.7%), a multiple near historic lows for the company.​

• Such a drastic contraction rarely persists when the company’s growth trajectory is this strong, especially in light of sector leadership and margin expansion.

• This signals that investor sentiment, not fundamentals, is driving the current share price. Historically, companies that build a strong moat and deliver outsized growth tend to dramatically outperform from such valuation troughs.

Segment Dynamics: Commerce, Fintech, and Logistics

Both e-commerce and fintech revenues are compounding quickly. The company’s investments in logistics, payment processing, and omnichannel capabilities are extending its competitive lead:​

• Commerce revenue LTM reached $13.8B in June 2025, showing scale but also resilience against local competitors.​

• Fintech revenue, under the MercadoPago and credit segments, advanced even faster, perhaps reflecting the growing importance of digital finance in Latin America’s fast digitizing economies.​

Outlook: Why Now May Be the Turning Point

The convergence of explosive growth, robust cash flow, and deepening competitive advantages positions Mercado Libre for future market leadership. With valuation metrics at multiyear lows and continuous moat expansion, investors may be staring at a rare opportunity:

• Margin expansion continues with cost controls and scale, improving profitability quarter after quarter.​

• The absence of significant stock price appreciation in the face of fundamental strength could catalyze a powerful re-rating if sentiment shifts.

Conclusion: Hidden Giant, Contrarian Play

Mercado Libre’s fundamentals paint a picture of an unstoppable Latin American digital titan, yet its valuation is stuck in the doldrums. Historically, such disconnects resolve with outperformance as the market aligns with the real business story. For disciplined investors, Mercado Libre presents not just growth but deep value—an opportunity that arises only when capital markets lose sight of fundamentals.​

Two Titans, Two Continents, Similar Playbook

Sometimes, if you want to invest in a certain business model, you can find multiple similar companies. And yes, Amazon and MercadoLibre have a closely related core business. However, they are so much more — in different ways. Both are ecosystem builders, not just online shops. Two conglomerates of commerce, logistics, payments, and data. Both dominate their respective continents. And, right now, both are under pressure, exactly the kind of pressure that tests conviction and might open opportunities.

Amazon’s issues aren’t new. AWS growth has slowed to the high teens, the retail segment has lost much of its appeal (to investors, at least), and AI expectations haven’t all been fulfilled. All these reasons led to a lack of performance for Amazon. The company is down this year, while the rest of the Mag7, and quite frankly, the market is running away. When you’ve built one of the most profitable infrastructure businesses in the world, markets suddenly expect miracles every quarter. That’s the curse of scale. Jeff Bezos constantly selling shares doesn’t help either. But even with that, you still have the world’s most sophisticated e-commerce and logistics network, one of the fastest-growing ad businesses on the planet, and a cloud empire that will keep compounding as AI usage expands. While Google Cloud and Azure are growing faster, investors should keep in mind that AWS is still the indisputable leader.

MercadoLibre (MELI), on the other hand, is what Amazon was a few years ago. Still smaller, but growing rapidly, and building up an unprecedented commerce ecosystem. MELI has another tailwind Amazon never had: many people in Latin America are first-time users of digital services. With phone and internet adoption, MELI is able to basically create customers out of thin air. Customers that don’t know (and don’t need to know) anything else, because MELI’s services are convenient and universal. All business segments continue to grow at double-digit rates, its marketplace dominance is untouchable, and ventures like its FinTech are rounding out the investment case. If you believe in Latin America’s long-term digital adoption, you can’t not believe in MercadoLibre. I am already heavily betting on this trend with Nu, but I wouldn’t mind adding to my conviction if the opportunity arises.

Both Amazon and MELI sit in that rare category of businesses where the short-term headwinds are simply the price of building something indestructible (which they have already done, to an extent). Their moats don’t just exist, they expand with every second they exist. While others chase the next AI narrative or speculative small caps, these two compound in silence, through infrastructure and habit.

I’m not pretending they’re cheap. I’m just saying they’re inevitable in the long run. Amazon below $200? I’ll buy. MercadoLibre below $1,800? Same story. Those are the levels where long-term investors make their best entries, not traders chasing momentum. We are only 10% away from my entry points, and I am excited.

For now, I don’t hold either yet. But these are the stocks you can buy, fall asleep, and wake up years later with a smile. They are the ultimate “peace of mind” growth plays.

$AMZN (+0,37%)
$MELI (-0,35%)

+ $1k added to $AMZN (+0,37%) today 🛍️ 🛒

$MELI (-0,35%)

$MELI (-0,35%) is down ~10% this week because Amazon announced that it wants to expand in South America or something like that.

Anyways, I believe in MercadoLibre and took this opportunity to purchase some stock at a discount.

$TMUS (+0,05%) was one of my first purchases, had a nice run but I see more potential in different positions and as this has kind of become a Micro-Position I decided to liquidate it and reporpuse it for $MELI (-0,35%)