Contents
Key Takeaways
- Shares of MELI declined 6.8% today, now sitting 37% below the 52-week peak of $2,614, with current price near $1,649
- JPMorgan shifted its rating on MELI from Overweight to Neutral while slashing the price target from $2,650 down to $2,100
- The firm anticipates MELI’s 2026 profit margins to fall approximately 1.8 percentage points short, roughly 15% beneath analyst consensus
- Intensifying rivalry from Amazon and Sea Limited’s Shopee platform in Brazil is squeezing profitability
- Despite achieving 44% revenue expansion in 2025, MELI’s net income advanced only 5%, dragged down by surging bad debt reserves
Thursday brought more turbulence for MercadoLibre as shares of the Latin American e-commerce and fintech powerhouse tumbled 6.8% during afternoon sessions. This latest selloff extends a brutal decline that has erased nearly 37% of the stock’s value from its June 2025 zenith of $2,614. Trading around $1,649, shareholders who enjoyed last summer’s rally are now nursing significant losses.
Broader market volatility played a role in Thursday’s weakness. Heightened U.S.-Israeli military operations targeting Iran triggered oil price spikes, unsettling markets worldwide. Goldman Sachs raised its 12-month U.S. recession probability to 25%. Major indices including the S&P 500, Dow Jones, and Nasdaq each shed approximately 1% as traders sought refuge in defensive assets.
Yet MELI’s challenges extend far beyond macroeconomic headwinds and geopolitical tensions.
JPMorgan Abandons Bullish Stance
On Thursday, JPMorgan shifted its stance on MercadoLibre to Neutral from Overweight, simultaneously reducing its price objective from $2,650 to $2,100. The firm pointed to persistent competitive dynamics in Brazil and immediate profitability headwinds as primary catalysts for the revision.
MELI’s chief financial officer recently signaled acceptance of operating margins hovering around 9% in the immediate future. This revelation alarmed Wall Street. JPMorgan subsequently lowered its 2026 margin projection to 8.8%, now forecasting the company’s earnings before interest and tax will miss consensus estimates by approximately 15% for the year — with Q1 2026 potentially undershooting by roughly 24%.
The investment bank also trimmed its long-term margin outlook to 14% from a previous 17%, acknowledging limited clarity on the timeline for profitability recovery.
Meanwhile, Sea Limited’s Shopee platform isn’t retreating from Brazil. The Singapore-based competitor intends to redirect savings from take-rate adjustments into promotional incentives linked to Brazil’s Pix instant payment infrastructure, maintaining aggressive competitive positioning.
Financial Performance Under Scrutiny
MELI’s full-year 2025 financial results presented a complicated picture. The company generated $29 billion in revenue, representing impressive 44% year-over-year expansion — the type of top-line growth that remains elusive for most corporations. However, net income climbed merely 5% to reach $2 billion.
The primary drag: provisions for questionable accounts surged 66%, reflecting aggressive credit portfolio expansion. Loan balances swelled 90% during Q4 2025 alone. Operating margins contracted to 11.1% versus 12.7% in the prior year.
Management has since implemented tighter lending criteria, establishing more conservative limits on individual loan amounts. The company is also deploying artificial intelligence tools and leveraging customer analytics to more effectively screen high-risk borrowers.
On the marketplace front, Amazon continues gaining ground against MELI throughout various Latin American territories, introducing yet another competitive challenge.
Regional Economic Developments and Long-Term Outlook
Some positive macroeconomic signals are emerging regionally. Argentina has witnessed poverty rate declines, though inflation persists at elevated levels around 32%. Venezuela’s petroleum exports have climbed to their strongest levels since 2018 following political transition — suggesting improving economic fundamentals in an important market.
JPMorgan maintains expectations for long-term earnings compound annual growth near 32% spanning 2026 through 2029. Nevertheless, the firm doesn’t anticipate the market will reward this trajectory during 2026 given substantial near-term ambiguity.
MELI’s price-to-earnings multiple has compressed to approximately 44. Year-to-date, the stock has surrendered 16.5% of its value.
