+ Watch MELI
on My Watchlist
An online trading company which focused on enabling e-commerce and its related services.
near monopoly position; growth thru increased internet access in L.A.; temp drop due to currency valuation
Combo of EBAY and Amazon for latin america. I have been waiting for a pull back, time to go e-shopping with MELI.
MercadoLibre keeps getting referred to as "the Ebay of Latin America".Just in case "they" are right, I ran a comparison of MELI with EBAY. I assumed MELI would mimic EBAY in as many ways as possible. Then I compared its valuation to its current market cap.Long story short, MELI's valuation would be worth $23 billion once mature --- or roughly $518 per share. At today's price of $110, that's a boatload of upside.Whether or not the prognostication is accurate, the message was clear that this stock should continue to be en fuego. Outperform.____________________________________________________http://boards.fool.com/1069/breakout-30862960.aspx?sort=whole#30863332(9/9/2013 on the RB boards)This was kind of an interesting article that I reference just to keep things in perspective:http://pulsosocial.com/en/2013/08/01/e-commerce-in-latin-ame...- e-commerce in Latin America (as a whole) will be approximately $69 billion this year- e-commerce in the US will be approximately $200 billion this yearEBAY has a similar business model as MELI and sports a market cap today of $68 billion. The total e-commerce market in Latin America is roughly 1/3 that of the US.IF MELI were to find a way to become "the EBAY of Latin America" (everyone's favorite saying these days) and mimic EBAY's operations in every way possible (% share of the total e-commerce market, % margins, etc), they could expect their fundamentals to be roughly 1/3 of EBAY's as well. Or, said another way, their top and bottom lines would be 1/3 as large.And if the market applied the same valuation to MELI's fundamentals as they do to EBAY's, MELI could have a market cap ~ $23 billion (1/3 * $68b).Based on today's market cap of $5.7b, that would imply a 300% upside -- or a potential price of $518 per MELI share.I know that this analysis is simplistic and inherently flawed. And I'm happy to hear any thoughts/opinions/outspoken verbal attacks about my assumptions (one of the largest being that MELI could sell to all of Latin America). But my bottom line is that if MercadoLibre can continue to grow, the Latin American e-commerce market can support plenty of upside for them. $128/share could seem like nothing, a few years down the road.-SimonLong MELI
Last quarter was a good one. Currency fluctuations make results look funky. Will continue to perform well in the future particularly with recovering world economy
As Latin America continues to rise in wealth and computer acess, Mercado Libre reaps the rewards of wide-moat sector leadership in both South and Central America..
Great company, great business model, highly desirable market position in an industry that lends itself to demand side economies of scale (network effects). MELI has a strong economic moat, no qualms about that. However, the market price is expecting too much.- This company is trading at 51x TTM earnings. I estimate 2013’s FCFE to fall somewhere near $93M, meaning a multiple of 57x.- Make the following assumptions: MELI manages to grow FCF at a rate of 15% a year for the next decade, and then apply a perpetuity growth rate of 6% (both pretty heroic assumptions). Apply a discount rate of 12%. Our fair value estimate would be close to $80 a share, well below its $120 current market price.- Venezuela represents 15% of the revenues, and 20% of the operating profits. No company has been able to expatriate any money from Venezuela since 2011, and the outlook is quite pessimistic for the next 6 years (until Maduro’s rule –hopefully- ends). Even then, in the quite optimistic scenario that a pro-market president takes office, he is bound to push for a drastic devaluation of the bolivar (Venezuela’s currency) which will definitely hurt MELI’s performance in this country, as well as it’s accumulated assets. The illegal exchange rate in Venezuela is USD 1 = 32 VEF (which compares to the official yet fictitious rate of USD 1 = 6.3 VEF)- Argentina represents 24% of the revenues, and 23% of the operating profit. Just like in Venezuela, Argentina applies currency controls, meaning the effective impossibility to expatriate any profits. Likewise, the argentinian peso is long due to depreciate, which the government resists. It is widely expected that Argentinas’ next government will execute a painful devaluation of the peso, which will hurt MELI’s performance (however, this might be partially compensated with a proportional decrease in SG&A and R&D expenses, since MELI’s headquarter is located in Argentina).- The internet penetration rate is close to 50%. Europe’s most developed countries boast rates close to 80%. Even if this was achieved in 5 years, it would imply a CAGR of 10%. And afterwards there’s little growth in this. After this theoretical catch up, all growth must come from GDP per capita growth, increase in market share (which MELI already dominates), increase in ecommerce as a percentage of GDP (which could at most double, if it is to catch up with developed nations)- Argentina & Venezuela’s currencies need to crack. Brazil’s growth is moderating. Mexico is fine, but represents less than 5% of the revenues.- To sum up: MELI is in an enviable position in Latin America’s e-commerce, however the market’s expectations are “too damn high”. I would rate it a "Hold" at best.
Ebay of Latin America
Seems like a solid growth story, but it is relative overpriced .. It will need to execute to deliver growth which I am expecting it will
The stock has simply gotten way ahead of itself. At 13 X sales, and 17.5 X book value, there is a lot of blue sky between the current price and fair value.
This South American Amazon like company is partially owned by eBay because eBay realized that they understood their market a lot better than eBay ever could. I have owned this company for over year and I believe that they are proceeding along a course that is moving along with the adoption of the Internet and e-commerce in most of the large South American nations. I think in 10 years this company's market cap will be 4 to 5 times what it is now.
Dreadful user experience and the competition is starting to move against them.
"We have to look at the bigger picture here with the overall retail environment in Latin America: right now, e-commerce makes up about three percent. So that just gives you an idea of how much room this company has to run. They are the leader there by far, so I think that if you're looking to get in with a company taking advantage of that e-space in Latin America, MercadoLibre is definitely the way to do it." -Jason Moser, on (the surprisingly kickass) InvestorBeat
This is a very well managed company with the potential to be the next Ebay.
Efficiently run, best of breed in the region. despite low mobile and computer penetration in the region, MELI continues to maintain deepest and most wide ranging customer base throughout central america. As use of mobile devices explodes, and use of non-mobile computing continues to increase in the region - MELI will continue to be well positioned to provide additional services to people in these markets.
Key player in online shopping in Fast growing Latam market.eBay of Latam, with ebay owning 25%. Countries like brazil have à large population with a fast growing middle class and relatively low Internet penetration. So lot's of room for growth.
Picked at a suppertime game that Tom G. catalyzed but didn't commit to scoring, asking for a stock you think will beat the market over the next five years. Outperform.
The leader in the Latin American online retail market. Get's about three times as many visitors per month than Amazon does in the regions it operates. Operates more like eBay than Amazon, which keeps margins high. Simply, it takes the best, most profitable aspects of commerce websites, and successfully integrates them into its own website, e.g. MercadoPago = PayPal. The Latin American market has a lot of potential for growth, with only 40% internet penetration. Internet access is growing at a phenomenal rate in the region, so it won't take long for the company to realize this potential. Online commerce is huge in the area, it's estimated Chile does more business online per capita than the US.Earnings misses don't concern me. ROE is good, and debt levels are minimal. The earnings growth is still fantastic, and I believe the P/E multiple is justified by the growth potential. It has a lower PEG than eBay. It's also trading at a discount to its historical P/S ratio.
Internet peneration in South America.
Latin consumers are just starting to use the internet to shop. As they become accustomed to not taking possession of their purchases as soon as they buy them, use will increase and MELI will appeal because of the culture of haggling. Moreover, MELI is already available in all the large SA markets.
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