MercadoLibre (MELI) Wins A Buy Reaffirmation, Is The Stock Still Cheap?
Analyst call puts MercadoLibre’s credit card push and Brazil growth in focus
MercadoLibre (MELI) is back in the spotlight after Bank of America Securities reaffirmed its Buy rating, tying its view to the expanding credit card business and faster growth in Brazil.
The firm highlighted long term return potential from MercadoLibre’s credit card operations, where the portfolio more than doubled year over year in Q1 2026 and now represents a meaningful slice of the loan book. At the same time, Brazil’s role has widened, with FX neutral gross merchandise volume growth of 38%, items sold up 56%, and unit shipping costs down 17% despite higher shipment volumes.
See our latest analysis for MercadoLibre.
MercadoLibre’s recent rally, with a 7-day share price return of 5.27% and a 30-day share price return of 7.87%, comes against a weaker year to date share price return, which has declined 10.66%, and a 1-year total shareholder return that has fallen 29.86%. However, the 3-year total shareholder return of 52.83% points to stronger longer term momentum.
If MercadoLibre’s mix of e-commerce and fintech has caught your eye, it can be useful to compare it with other growth stories by scanning 20 top founder-led companies
With MercadoLibre trading at a discount to one intrinsic value estimate, yet on a P/E multiple roughly double its sector, the real question is whether this is a mispriced growth engine or a stock where markets already anticipate the next leg of expansion.
Most Popular Narrative: 22.8% Undervalued
MercadoLibre’s last close of $1,763.36 sits below a narrative fair value of $2,284.19, which frames the current debate around how much growth is already reflected in the price.
The story behind my purchase of Mercado Libre it’s not a technical as the other commentaries. I am positioned such that I’ve been in meetings with the former ambassador for Venezuela, realize President Trump‘s desire to have “better relations“ with Latin America, hope for a more open Cuba / Venezuela. I regret that I missed out on buying Amazon and the Panamanian airline Copa. The main catalyst for my purchase, however, was that Michael Berry bought the stock in the 1600 range and that the stock has fallen from a peak of about 2300 to below the 1600 level. These factors became a catalyst from my review of the statistics.
According to Jobeda, the valuation hinges on high revenue growth, firming margins and a profit multiple that assumes MercadoLibre can keep compounding its current scale. Curious which specific growth and profitability assumptions sit behind that $2,284.19 fair value and how sensitive the story is to small changes in them.
Result: Fair Value of $2,284.19 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this MercadoLibre narrative could be tested if credit losses climb as the loan book expands, or if Brazil, Mexico or Argentina see weaker consumer activity.
Find out about the key risks to this MercadoLibre narrative.
Another View: MercadoLibre through the earnings multiple lens
The earlier narrative framed MercadoLibre as undervalued, but the earnings multiple paints a tighter picture. The stock trades on a P/E of 46.6x, compared with about 18.8x for the global Multiline Retail industry and 22.7x for peers, while the fair ratio sits lower at 36.5x.
Put simply, the current price carries a premium that is well above both the sector and peer averages, and also above the fair ratio that the market could eventually move toward. For you as an investor, that gap can look like potential upside if the story keeps improving, or valuation risk if expectations cool from here. The key question is which side of that trade you feel more comfortable on.
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
Taking all this into account, do you feel MercadoLibre’s story leans more toward opportunity or risk, and how quickly do you want to decide for yourself? To weigh both sides using the same framework, check out the 3 key rewards and 2 important warning signs.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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