Hey there, bargain hunter. Let me ask you something: if a company just reported its fastest revenue growth since 2022, processes nearly $350 billion in annualized payment volume, and is sitting at a market cap well below what most analysts think it’s worth — would you call that cheap?
That’s MercadoLibre (MELI) right now.
On May 7, the company dropped its Q1 2026 numbers and they were, frankly, hard to ignore. Net revenues of $8.85 billion, up 49% year-over-year — the strongest pace in almost four years. Total Payment Volume hit $87.2 billion in the quarter, up 50% YoY on a reported basis and 55% on an FX-neutral basis. Gross Merchandise Volume came in at $19 billion, up 42%.
Here’s the thing about the EPS miss. Earnings per share came in at $8.23 versus a forecast of around $8.83 — a 12% shortfall — and the stock got hit. Operating margin compressed 600 basis points to 6.9%, down from 12.9% a year ago. That’s what the headline said. What it didn’t say is why: the company is deliberately spending into its growth. Credit expansion, logistics buildout, Fintech infrastructure. This is investment, not deterioration.
What the business actually is:
- E-Commerce: Dominant marketplace across Brazil, Mexico, and Argentina — 84 million unique active buyers in Q1, up from 67 million a year ago. Items sold: 722 million in the quarter, up 47%.
- Fintech (Mercado Pago): 83 million monthly active users, up 29% YoY. Assets under management up 77%. The fintech segment now generates more than half of total revenue.
- Mercado Crédito: The lending arm is still young and fast-growing. NIMAL — net interest margin after losses — held at 17.8%, a number that suggests credit quality is holding up even as the book expands.
Slight tangent, but it matters: Brazil revenue grew 55% year-over-year in Q1 and Mexico grew 62%. These are not slowing markets. These are accelerating ones. The Latin American consumer is coming online and MELI has the infrastructure, the brand, and the data advantage to capture most of that wave.
The valuation case. The stock’s 52-week range runs from $1,593 to $2,645. As of the aftermarket reaction to Q1, shares were sitting around $1,856. At that price, the company’s market cap is roughly $94.8 billion. The median analyst price target from nine separate estimates sits at $2,400 — implying nearly 30% upside from where it traded post-earnings.
The argument against is simple: margins are compressed, the EPS trend is lumpy, and currency risk in Argentina and Brazil is never fully off the table. All fair. But for a company growing the top line at 49%, managing a $350B+ payments network, and expanding credit at controlled loss rates — this is not a name you ignore because one quarter missed EPS by 60 cents.
The market punished MELI for investing. That gap between price and potential is exactly the kind of setup this newsletter looks for.
Worth a look before that median $2,400 target closes the gap.
