MercadoLibre Stock Drops Premarket After Q3 Earnings Miss Estimates Despite Strong Brazil Sales – Retail Stays Cautious

• The Latin American e-commerce and fintech giant reports a 39% in net revenue, beating expectations.
• The company says gains in Brazil, where it recently expanded its free shipping program, lifted overall results.
• Adjusted profit misses analysts’ target.

MercadoLibre, Inc.’s shares dropped 2% in early premarket trading on Thursday, after the Latin American e-commerce giant reported quarterly profit that missed expectations.

Earnings rose to $8.32 per share in the third quarter, up from $7.83 a year ago. Analysts were expecting $9.16. Net revenue rose 39% to $7.41 billion, driven by higher sales in Brazil following the expansion of its free shipping program in the country in June. The topline beat analysts’ target of $7.21 billion.

"We made investments in Brazil and we are already seeing the paying-off of those investments," CFO Martin de los Santos said in an interview with Reuters.

Santos added weak sales in Argentina, and the devaluation of the Mexican peso hurt its net profit, which grew 6% to $421 million. MercadoLibre is Latin America’s most valuable company and operates its e-commerce platform and fintech arm, Mercado Pago, in several countries across South America. 

What Is Retail Thinking?

On Stocktwits, the retail sentiment for MELI shifted to ‘neutral’ as of early Thursday, from ‘bearish’ the previous day. Users were cautiously discussing taking new bets on the stock, given its recent strength.

“If this drops in the morning, I’m doubling down,” a user said.

“Long term thesis is still sounds,” remarked another.

As of the last close, MELI stock has gained 35% year to date.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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