Morningstar

Morningstar, Inc.

Equity Bottom-Up

MercadoLibre's long-term success depends on its ability to drive transaction and payment volume growth, and we identify several favorable tailwinds. Thanks to external (smartphone ubiquity, consumer familiarity with online transactions, Latin America wealth creation) and company-specific factors (product mix diversification, new on- and off-platform payment technologies and shipping solutions), we believe MercadoLibre is well positioned to capitalize on accelerating digital commerce trends…

We find there are three important takeaways from MercadoLibre's strong start to 2019, which was accentuated by 93% constant-currency revenue growth and a return to positive operating margins for the first time in five quarters. First, payments are becoming as important as (and may surpass) its marketplaces to future cash flow. We've long thought that a strong network effect can allow e-commerce players to unlock incremental growth, and while we've highlighted Amazon and Alibaba for this in the…

<p>Shares of wide-moat MercadoLibre are up almost 9% in the past week on the heels of a $1 billion public equity offering as well as strategic investments from PayPal ($750 million common stock investment) and growth-oriented investment firm Dragoneer Investment Group ($100 million convertible preferred stock). In our view, these investments not only reinforce our longer-term positive bias on the company, but with MercadoLibre having open lines of communication with PayPal's operation team, we see…</p>

<p>MercadoLibre's long-term success depends on its ability to drive transaction and payment volume growth, and we identify several favorable tailwinds. Thanks to external (smartphone ubiquity, consumer familiarity with online transactions, Latin America wealth creation) and company-specific factors (product mix diversification, new on- and off-platform payment technologies and shipping solutions), we believe MercadoLibre is well positioned to capitalize on accelerating digital commerce trends…</p>

Brazil

MercadoLibre, Inc. operates an online trading site for the Latin American markets. The Company's website allows businesses and individuals to list items, conduct sales, and purchases online in either a fixed-price and auction format. MercadoLibre offers classified advertisements for motor vehicles, vessels, aircraft, and real estate, as well as online payment services.

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