Key Points
MercadoLibre stock climbed 28% in November, reaching its highest levels since November 2021.
The stock’s chart indicates a cup-with-handle breakout at $1,398.59 on November 14, with the stock showing a rally since then.
Wall Street expects a bullish year for MercadoLibre with a projected earnings growth of 134% to $22.36 per share.
5 stocks we like better than MercadoLibre
Uruguay-based e-commerce platform MercadoLibre Inc. NASDAQ: MELI saw a 28% increase in November, reaching its highest levels since November 2021.
The MercadoLibre chart shows a cup-with-handle breakout above $1398.59 on November 14. The stock has been on a rally since then and is currently 14% higher from its buy point. This suggests that a pullback with moving-average support could present the next buying opportunity.
Wall Street holds bullish expectations for this stock, foreseeing a 134% increase in earnings this year to reach $22.36 per share.
Next year, earnings are projected to grow by 48%, reaching $33.13 a share.
Breaking Black Friday sales records
MercadoLibre’s stock surged 4.15% in heavy volume after the company, along with Shopify Inc. NYSE: SHOP, reported record-breaking Black Friday sales.
The company reported an 80% growth in gross sales compared to the year-ago period on Thursday, November 23, and Friday, November 24.
In November, there was a 39% increase in performance compared to the same period in 2022.
MercadoLibre highlighted other key points, including:
The sale of electronics, particularly cell phones, notebooks, and TVs, rose by 140%.
The average number of items sold daily is 1.8 million, but on November 23 alone, this volume peaked at 2.8 million items, surpassing last year’s Black Friday even before Friday.
To achieve this record, Mercado Libre invested in logistics, hired 7,200 temporary employees, and maintained fast delivery times even during the sales peak.
“We are also succeeding in our objective of sustaining growth records without sacrificing the company’s margins,” said Fernando Yunes, senior vice president and leader of Mercado Libre in Brazil, in a statement.
Analysts’ bullish view
usafinancedigest’s MercadoLibre analyst forecasts show a consensus view of “moderate buy” with a price target of $1,706.07, representing an upside of 7.36%. The stock also boasts a 29% return on equity, indicating effective use of shareholder equity to generate profits.
However, there are reasons for caution. The stock’s price-to-earnings ratio is 82, which is particularly high.
Investors willing to pay up
A high P/E ratio doesn’t necessarily indicate a negative aspect. It implies that investors are willing to pay a premium for a company’s future earnings, suggesting high growth expectations.
MercadoLibre is categorized with other tech stocks specializing in online retail. Industry peers include Amazon.com NASDAQ: AMZN and Alibaba Group Holding Ltd. NYSE: BABA.
Amazon’s price performance has been impressive since late October, and MercadoLibre is slightly outperforming Amazon.
The Alibaba chart indicates that the stock has been a poor performer this year and has significantly declined since its high in October 2020.
Unlike Amazon, MercadoLibre’s business model includes not only an online marketplace but also a financing unit and a digital advertising arm.
Fintech unit expanding
The company has been broadening its credit and payment services. Its Mercado Pago fintech unit runs a digital wallet service that’s popular with its Latin American customers. It also allows transactions outside of the MercadoLibre platform.
In general, Latin American large-cap stocks have performed well throughout this year, experiencing the same declines as U.S. stocks from August through October. This suggests that digital payments will increase alongside purchases. Furthermore, the Latin American digital advertising market is growing rapidly.
Stock split in the cards?
Given the high stock price, a split in the near future would not be surprising.
A high-priced stock may split to make shares more affordable for a broader range of investors. By reducing the stock price and increasing the number of shares outstanding, a stock split can improve its liquidity and attract a larger investor base without harming its overall market value. Before you consider MercadoLibre, you’ll want to hear this. usafinancedigest keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. usafinancedigest has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and MercadoLibre wasn’t on the list. While MercadoLibre currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here Thinking about investing in Meta, Roblox, or Unity? Click the link to learn what streetwise investors need to know about the metaverse and public markets before making an investment. Get This Free Report
