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Should You Buy the Dip in MercadoLibre?
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Should You Buy the Dip in MercadoLibre?

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Mercado Libre is down by 15% in the last six months due to fears over economic uncertainty in Latin America and the competitive threat from Amazon and eBay. However, the company is still firing on all …

Mercado Libre is down by 15% in the last six months due to fears over economic uncertainty in Latin America and the competitive threat from Amazon and eBay. However, the company is still firing on all cylinders, and it has enough competitive strength to defend its business versus the competition. Should you buy the dip in MercadoLibre?

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  • The gap between North America and Latin America can only close, opening up opportunities for growth.
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  • ЇЇ ІМЯМ ПАХНУТЬ МАГНОЛІЇ

    ПРОРОСТИ КРІЗЬ КАМІННЯ

    ЗОРЯНИЙ ЧАС
    Така зваблива
    І цнотлива
    На мапі
    Всесвіту
    Земля.
    Мама,
    Верховина,
    Україна
    Свій дух
    Заради сина зберегла.
    А внукам?
    Ні, передати не змогла.
    Які борги?
    Їх віддаватиме нащадок...
    Землі,
    Її ж дари –
    У спадок...
    Таїн краплистих
    Вічний спомин.
    Оскомина
    Душі
    І златозорний піт
    Кохання.
    І болі,
    Затерті
    В репресіях.
    Зрання –
    Облудні
    Дороги.
    А перестороги?
    Чи долі благовісти?
    Доріг
    Життєвих
    Траверсів –
    Там Шандор
    Петефі...
    І Фенцик.
    Шукають підмоги.
    Там Бродій і Волошин
    Не можуть розділити
    Одвічно ціле,
    Карпатський край.
    Дороги...
    Там анцуг і холоші,
    Там Еган і Шугай
    Ходять по окрайку
    Слави.
    Знай, наших,
    Знай!
    Політик і опришок
    У чому винні?
    Так вийшло – понад усе
    Свобода пахне
    Краще.
    Тимін – її
    Органічна сполука,
    Мозолисте
    Тіло
    Через рідні долини
    У Вічність,
    У невмирущість
    Тікає.
    Дужа днина
    Руками
    До неба
    Сягає...
    Дивна
    Наука:
    На тімені долі,
    У хащах
    Говерли,
    Укмітила сяйво.
    У слові
    Зростає.
    Аж стовпом
    Постала...
    Заклякла.
    Залилась сонцем.
    Вітер...
    Стовпи.
    Простір
    Чи заслін це?
    Ріки, квіти...
    Марево.
    Бескиди погоріли.
    Куди зазирають
    Прозорі тіні?
    Навіки
    Стовчені у сіль.
    Стоять
    Стовпи...
    Роки.
    Куди?
    Щоночі вишукують
    Недогризки віри,
    Каверзи Мари,
    Повчання Езопа
    І Геродота послання-листи...
    Нічні інтриги
    Тривожать
    Дуже
    Затертий і випрілий
    Час.
    А шлях?
    Якого племені,
    Якої доби
    Всесильні мужі
    Кроками
    Визначать
    Планиду
    Для нас?
    То, певне,
    Про завтра
    Пророчать
    Чи лудять
    Реалії-сни.
    На радість,
    А може,
    На горе-біду
    Утомлені сонцем,
    Вкарбовані
    Часом
    І бруком
    Видінь,
    В Карпатській
    Сторонці
    Бродять бувальці:
    Неандертальці,
    Синантропи,
    Кроманьйонці,
    Пітекантропи...
    Люди порфір.
    Від зневіри
    До Синім-країни,
    Від звіра
    Тікали...
    Де світа окрайок,
    Де кесаря слід,
    За стопами
    Озлобленої долі
    Рахували власні мозолі
    Фундатори слова
    „Народ”.
    Рід зупинився
    Застиглими
    Плямами.
    Ріками
    Синьої крові
    Розлилися
    Води.
    І посеред води –
    Брукована стежка,
    Пропалена болем.
    Перекреслює усе
    І всіх...
    Де
    Миті інтриги,
    Чи індульгенції
    Узди –
    Йде доля правди
    У нікуди.
    Нічні
    Сентенції.
    Там сотні свіч.
    А за межею –
    Водопійний ріг.
    Віки.
    Роди.
    Така піднесеність
    Велична.
    Німа язичність,
    Без’язика –
    Коли сам вбивця
    Проти вбивства,
    Коли життя
    Проти життя.
    Там наші погляди
    На стику.
    І знову ти –
    І знову я.
    Трансформація.
    Ініціація.
    А геніальність
    Поряд, тут,
    Бо там
    Невивершеність
    Прагне
    Знайти до серця путь.
    Довершеність
    Відбитками
    Гаптує вік.
    А її доля,
    Вихолощуючи злу неволю,
    Нове життя цілує
    У закривавлені мозолі
    Своїх долонь –
    Тисячоліть.
    Are you sure you want to
    Your message goes here
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Transcript

  • 1. Should You Buy the Dip in MercadoLibre? Source: MercadoLibre
  • 2. Introduction MercadoLibre has fallen by 15% over the last six months. Economic uncertainty in Latin America is generating negativity among investors. Besides, competition from Amazon and eBay could be a considerable risk in the medium term. On the other hand, the company is firing on all cylinders, and it has abundant opportunities for growth. The bears may be underestimating MercadoLibre’s competitive strengths. Is the dip in MercadoLibre a buying opportunity for investors?
  • 3. Lackluster Performance
  • 4. Argentina and Venezuela Are Big Markets for MercadoLibre Source: MercadoLibre
  • 5. Economic Turmoil in Latin America Brazil is generating disappointing economic growth lately. Venezuela and Argentina are experiencing rampant inflation rates and exchange-rate volatility. Regulations in Venezuela limit MercadoLibre’s ability to freely move its cash across boarders.
  • 6. Foreign Exchange Rate Volatility in Venezuela MercadoLibre has recently changed the exchange rate used to report financial results in Venezuela. The company will record a one-time re-measurement charge of between $47 million and $57 million in the second quarter due to the write-down of all of its Bolivar-denominated assets. MercadoLibre also expects to recognize a foreign-exchange loss of between $14.5 million and $21.5 million because of this accounting change.
  • 7. Risk and Opportunity in Latin America Economic uncertainty in Latin America will clearly be an important risk factor for MercadoLibre in the medium term. However, opportunities for growth are still exceptional in the region over the years ahead. A rising middle class and increased Internet penetration bode remarkably well for MercadoLibre over the long term. E-commerce accounts for only 3% of retail transactions in Latin America, leaving enormous room for further growth.
  • 8. Source: MercadoLibre
  • 9. Core Operating Metrics Source: MercadoLibre
  • 10. Payment Operating Metrics Source: MercadoLibre
  • 11. Sales Source: MercadoLibre
  • 12. Net Earnings Source: MercadoLibre
  • 13. MercadoLibre vs. Amazon and eBay Both Amazon and eBay have increased their presence in Latin America lately. Amazon launched its Kindle store in Brazil in December 2012; the company sells its devices at physical retailers and is offering digital products in the country. eBay is also promoting its cross-border shipping capabilities in Brazil, especially in electronics. Amazon and eBay are successful companies with a proven track record of growth and expansionary ambitions. They also have deeper pockets than MercadoLibre.
  • 14. Competitive Strengths MercadoLibre has the first-mover advantage and a widely recognized brand in Latin America. The e-commerce business is dominated by the network effect: Buyers and sellers attract each other to the platform, and the service becomes more valuable as it gains more users on both sides of transactions. This is a big advantage for MercadoLibre against Amazon and eBay. Amazon and eBay will probably face considerable regulatory hurdles when it comes to international shipping and payments. MercadoLibre understands the ins and outs of doing business in Latin America. Even if competition increases over time, growth opportunities should be big enough for MercadoLibre, Amazon, and eBay to succeed in Latin America over the long term.
  • 15. Foolish Takeaway  Economic uncertainty in Latin America can hurt performance in the medium term. However, over the long term, MercadoLibre can benefit from exceptional growth prospects.  MercadoLibre is generating rock-solid performance in spite of economic headwinds.  The company has enough competitive strength to defend its business from Amazon and eBay. Besides, there should be enough room for the three companies to operate successfully in Latin America over the years ahead.  For investors who can withstand the short-term volatility and focus on the long-term opportunity, buying the dip in MercadoLibre sounds like smart idea.
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