MELI Down 12% in One Week, Time To Buy The Stock?
We believe there is not much to fear in MELI stock given its overall Strong operating performance and financial condition. Considering stock’s Moderate valuation, we think it is Attractive. Here is our multi-factor assessment.
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | Moderate |
| What you get: | |
| Growth | Very Strong |
| Profitability | Moderate |
| Financial Stability | Very Strong |
| Downturn Resilience | Weak |
| Operating Performance | Strong |
| Stock Opinion | Attractive |
MELI stock has fallen meaningfully recently and we currently find it attractive. While this may feel like an opportunity, there is significant risk in relying on a single stock. On the other hand, there is a huge value to a broader diversified approach. Strategic asset allocation and diversification helps you stay invested. Did you know investors who panicked out of the S&P in 2020 lost significant upside that followed? Trefis High Quality Portfolio and Empirical Asset Management’s asset allocation approach are designed to reduce volatility so you can stay the course.
Let’s get into details of each of the assessed factors but before that, for quick background: With $110 Bil in market cap, MercadoLibre provides online commerce platforms in Latin America, enabling businesses and individuals to buy, sell, and invest funds through automated marketplaces and digital payment services.
[1] Valuation Looks Moderate
| MELI | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 4.6 | 3.3 |
| Price-to-Earnings Ratio | 53.8 | 24.0 |
| Price-to-Free Cash Flow Ratio | 15.0 | 21.1 |
This table highlights how MELI is valued vs broader market. For more details see: MELI Valuation Ratios
[2] Growth Is Very Strong
- MercadoLibre has seen its top line grow at an average rate of 39.8% over the last 3 years
- Its revenues have grown 36% from $18 Bil to $24 Bil in the last 12 months
- Also, its quarterly revenues grew 33.8% to $6.8 Bil in the most recent quarter from $5.1 Bil a year ago.
| MELI | S&P 500 | |
|---|---|---|
| 3-Year Average | 39.8% | 5.4% |
| Latest Twelve Months* | 35.8% | 5.2% |
| Most Recent Quarter (YoY)* | 33.8% | 6.1% |
This table highlights how MELI is growing vs broader market. For more details see: MELI Revenue Comparison
[3] Profitability Appears Moderate
- MELI last 12 month operating income was $3.0 Bil representing operating margin of 12.3%
- With cash flow margin of 35.2%, it generated nearly $8.5 Bil in operating cash flow over this period
- For the same period, MELI generated nearly $2.1 Bil in net income, suggesting net margin of about 8.5%
| MELI | S&P 500 | |
|---|---|---|
| Current Operating Margin | 12.3% | 18.6% |
| Current OCF Margin | 35.2% | 20.3% |
| Current Net Income Margin | 8.5% | 12.6% |
This table highlights how MELI profitability vs broader market. For more details see: MELI Operating Income Comparison
[4] Financial Stability Looks Very Strong
- MELI Debt was $9.0 Bil at the end of the most recent quarter, while its current Market Cap is $110 Bil. This implies Debt-to-Equity Ratio of 8.1%
- MELI Cash (including cash equivalents) makes up $4.0 Bil of $33 Bil in total Assets. This yields a Cash-to-Assets Ratio of 12.0%
| MELI | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 8.1% | 20.9% |
| Current Cash-to-Assets Ratio | 12.0% | 7.0% |
[4] Downturn Resilience Is Weak
MELI has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
2022 Inflation Shock
- MELI stock fell 69.1% from a high of $1,984.34 on 20 January 2021 to $612.70 on 16 June 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 15 August 2024
- Since then, the stock increased to a high of $2,613.63 on 30 June 2025 , and currently trades at $2,172.75
| MELI | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -69.1% | -25.4% |
| Time to Full Recovery | 791 days | 464 days |
2020 Covid Pandemic
- MELI stock fell 39.8% from a high of $742.74 on 19 February 2020 to $447.34 on 1 April 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 6 May 2020
| MELI | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -39.8% | -33.9% |
| Time to Full Recovery | 35 days | 148 days |
2008 Global Financial Crisis
- MELI stock fell 89.5% from a high of $78.81 on 28 December 2007 to $8.28 on 20 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 30 March 2011
| MELI | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -89.5% | -56.8% |
| Time to Full Recovery | 860 days | 1480 days |
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read MELI Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.