Benchmark sends bullish research reports to Latin American e-commerce giant MercadoLibre (MELI.US) with both safe-haven and alpha attributes

The Zhitong Finance App learned that BenchMark, a well-known investment agency on Wall Street, rated MercadoLibre (MELI.US), one of the world's largest e-commerce platforms, as the absolute dominant force in the Latin American e-commerce market, giving the stock a “buy” rating for the first time. Benchmark's analyst team launched stock ratings and target price coverage for Latin American e-commerce giant MercadoLibre on Tuesday EST, giving it the most optimistic bullish investment rating of “buy” and a target share price of up to 2,500 US dollars, which means there is more than 20% room for MercadoLibre's stock price to rise over the next 12 months.

Investment agency Benchmark said that MercadoLibre is an absolute regional leader in the global e-commerce market. Taking advantage of the fact that the Latin American digital market is not yet saturated and the penetration rate is seriously insufficient, the e-commerce giant has tremendous potential for growth in online retail and fintech.

“As a recognized leader in the region, accounting for more than a quarter of the Latin American online retail market, MercadoLibre is very helpful in grasping the expansion narrative logic of this region with the strongest e-commerce business growth,” Benchmark said in a research report released on April 15.

Benchmark's team of analysts believes that the e-commerce giant provides investors with strong and sustainable long-term growth prospects. In particular, MercadoLibre has a deep understanding of the growing Latin American buyer base, and has great potential to expand the market size in the underserved fintech market through effective cross-selling and upward upselling models.

Benchmark's target price for MercadoLibre is $2,500 within 12 months, which means that the upward potential is about 22.7%. Since the beginning of the year, MercadoLibre's stock price has risen sharply by about 25%, far higher than the US stock market benchmark, the S&P 500 index, which has fallen by more than 8% since the beginning of the year.

MercadoLibre's strong rise from the beginning of the year to date highlights the e-commerce giant's strong “safe-haven investment attributes” in a turbulent global market with huge cash flow reserves and strong performance growth expectations, as well as the value of “Alpha's excess income.” The so-called “alpha” is defined as the actual return on investment far exceeding the “beta return” — that is, data that far exceeds the simultaneous return on investment achieved by tracking the benchmark stock index. The simultaneous return achieved by tracking the benchmark index is also known as “beta return” (beta return).

What is the origin of MercadoLibre? Why are future growth prospects strong?

Fourth-quarter results up to the end of last year showed total Q4 sales of approximately US$6.06 billion, up 37.4% year over year, which was US$120 million higher than Wall Street analysts' general expectations; earnings per share were US$12.61, which greatly exceeded expectations of US$5.05. Total Q4 payments reached US$58.9 billion, up 33% year on year; GMV increased 8% year over year, excluding foreign exchange effects, up 56% year on year.

“MercadoLibre had another good year in 2024, with more consumers and merchants choosing us, breaking the milestone of 100 million annual unique buyers and 60 million monthly active fintech users for the first time.” The company's management said in a statement of results.

MercadoLibre is a well-deserved Latin American e-commerce giant, operating in 18 Latin American countries, including the core economies of Latin America such as Argentina, Brazil, Chile, Colombia, Mexico, Peru, Uruguay, and Venezuela.

MercadoLibre was founded in 1999 in Argentina. The founder, Marcos Galperin (Marcos Galperin), was still attending Stanford University at the time, and its initial founding capital came from Silicon Valley venture leaders. MercadoLibre, headquartered in Uruguay, is the e-commerce and fintech giant with the highest market share in Latin America. It is called the “Latin American version of Amazon” by some Wall Street analysts.

MercadoLibre is expected to continue to maintain an absolute leading position and strong growth trend in the e-commerce and fintech sector in Latin America in the next few years, thanks to its extremely strong e-commerce and fintech platform ecosystem, extensive market coverage, and continuous investment over the next few years.

According to forecast data from market research platform Quartr.com, the e-commerce market in Latin America is expected to grow from US$151 billion in 2024 to US$232 billion in 2028, which is expected to grow by more than 54%. MercadoLibre, which dominates the e-commerce industry in Latin America, is still in the early stages of e-commerce business and fintech service penetration in the region, which means e-commerce giant MercadoLibre is expected to show blowout performance growth data in the next few years with the company's strong e-commerce + fintech ecosystem.

MercadoLibre plans to invest R$34 billion (US$5.8 billion) in Brazil in 2025. The investment amount is nearly 50% higher than last year. It will focus on logistics, technology and marketing, and plans to create 14,000 jobs. It is expected that the total number of employees in Brazil will reach 50,000 by the end of 2025. In addition, MercadoLibre also plans to invest 2.6 billion US dollars in the Argentine market, which means a significant increase of 53% compared to last year, and plans to invest 3.4 billion US dollars in Mexico to further expand its e-commerce and fintech business in Latin America.