Key Takeaways
- Michael Burry revealed he established a complete position in MercadoLibre (MELI) during the $1,600 price range following last week’s earnings-related decline.
- The stock dropped 12.7% on Friday after releasing quarterly results, but gained 0.5% in Monday’s premarket session.
- Burry anticipates MELI will generate approximately $40 billion in sales by 2026, representing roughly 30% growth from 2025 levels.
- The investor noted favorably that MELI compensates employees with cash-settled awards rather than traditional stock-based compensation.
- According to Burry, the shares trade “well below” his IV15 target, indicating potential for 15% annual returns over a 15-year-plus timeframe.
On May 11, Michael Burry announced via his Substack that he had initiated a complete new position in MercadoLibre (MELI) during the previous week, accumulating shares in the $1,600 range following the stock’s sharp 12.7% Friday decline triggered by its quarterly earnings announcement.
On Monday morning, MELI gained 0.5% during premarket hours. The shares currently hover near their 52-week bottom of $1,593.21 and have declined approximately 33% over the trailing twelve months.
Burry’s purchase timing aligned closely with that annual low point — precisely the type of opportunity he historically capitalizes on.
In his published commentary, Burry referenced MELI’s estimated revenue approaching $40 billion for 2026, marking a 30% climb from 2025 figures. Such expansion velocity for an enterprise already operating at this magnitude captured his interest.
He additionally emphasized a less-publicized characteristic: MercadoLibre avoids dilutive stock-based compensation. The company instead employs cash-settled employee incentive programs — a framework Burry considers advantageous for long-term valuation assessments.
“MELI is now well below my IV15 price, at which I expect long-term 15% annualized returns at 15 years or more,” Burry wrote.
The Infrastructure Advantage Burry Sees
Burry also highlighted that MELI operates atop substantial cloud-based infrastructure powered by Amazon Web Services. He clarified that the company doesn’t sell third-party cloud solutions — it exclusively leverages this infrastructure for its own operational needs.
This differentiation holds significance for Burry. He’s not characterizing MELI as a cloud services provider. Rather, he’s identifying it as an efficiently managed operator equipped with the technological foundation to sustain ongoing expansion throughout Latin America.
MercadoLibre conducts business across Brazil, Argentina, and Mexico, which collectively generate over 95% of total revenue. The platform reported exceeding 120 million unique active buyers and 1 million active sellers by the conclusion of 2025.
The enterprise maintains a market capitalization near $83.17 billion and currently trades at a price-to-earnings multiple around 41.64x.
Fundamental Metrics Analysis
Based on GuruFocus data, MELI registers a GF Score of 82 out of 100. The company achieves a perfect 10/10 grade for growth metrics and 8/10 for profitability measures. Financial strength receives a 6/10 rating.
The GF Value calculation positions MELI at $3,420.67 — a threshold GuruFocus designates as “significantly undervalued” compared to prevailing market prices.
Insider activity records show one purchase transaction within the past three months, encompassing 57 shares.
Burry’s stake represents a fresh addition. Until last week, he maintained no disclosed holdings in MELI within his tracked portfolio.
The stock concluded Friday’s session at a level consistent with that 52-week low territory, and Burry’s Substack disclosure verified his acquisition occurred during that identical period of market weakness.
