[Proposal] Whitelist MercadoLibre [NYSE:MELI]

I think we could have an interesting addition to the current mAssets list: MercadoLibre.

What is MercadoLibre?

MercadoLibre is the largest ecommerce marketplace and payments platform in Latin America, operating in 18 countries including Argentina, Brasil, México, Chile, Uruguay, et al.

ML has products and services than span ecommerce, financial services like credits, insurance, asset management and more (MercadoPago, MercadoCrédito), logistics (MercadoEnvíos) and advertising (MercadoAds).

As it doesn’t need to buy most of its inventory, it has a higher gross margin compared to classical online retailers like AMZN – practically, this means that a higher percentage of the company’s sales revenue is retained as profits.

So, it’s my understanding that, as ecommerce continues to grow vigorously in Latam and consumers shift to buy more and more online (even after the COVID19 pandemic subsides), and as their fintech services continue to diversify and gain more and more adoption (shown by MercadoPago’s sustained increase in total payment volume and number of transactions), ML will do very, very well in the following years.

ML is listed and traded on the NYSE.

Business model

Financials

Some Q3 2021 financial highlights:

  • Unique active users reached 78.7 million
  • Gross merchandise volume (“GMV”) grew to $7.3 billion, representing an increase of 23.9% in USD and 29.7% on an FX neutral basis
  • Total payment volume (“TPV”) through Mercado Pago almost topped $20.9 billion, a year-over-year increase of 43.9% in USD and 59.0% on an FX neutral basis. Total payment transactions increased 54.7% year-over-year, totaling 865.7 million transactions for the quarter.
  • Net revenues for the third quarter were $1.9 billion, a year-over-year increase of 66.5% in USD and 72.9% on an FX neutral basis.
  • Commerce revenues increased 69.0% year-over-year in USD reaching $1,224.7 million, while Fintech revenues increased 61.7% year-over-year in USD reaching $632.8 million.
  • Gross profit was $806.6 million with a margin of 43.4%, compared to 43.0% in the third quarter of 2020.
  • Income from operations was $160.4 million, compared to $83.1 million during the prior year.

More Q3 2021 financial results in their investor presentation and financial results document.

Risks

  • High inflation in some of the main countries it operates. ML reports in USD but collects in local currencies, so it’s arguable that the company revenue could be impacted.
  • Not profitable yet, and it has some debts.

Why listing this stock would mean a net benefit for Mirror?

  • Most importantly, I think a really good (and known) stock like $MELI being listed could increase adoption of Mirror in Latin America, which already is doing amazing in DeFi adoption.
  • Although ML isn’t profitable as of now, the company is really focused on growth and it has done extremely well so far, so I think it has tremendous potential.

What do you think?

As always, DYOR, NFA, etc.

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My support from LATAM

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