The S&P 500 is making a slow rebound from its tariff-induced plunge a few weeks ago, and it’s now down 6% year to date.
Although investors use the index as a proxy for how the overall market is doing, it’s important to keep in mind that the S&P 500 is a weighted-average index whose largest components account for a large portion of its performance. That means the market’s largest U.S. companies, like Apple, Microsoft, and Nvidia, will have an outsized impact on the whole.
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Any company that could be negatively affected by the new tariff program has been getting hit in its stock price. MercadoLibre (NASDAQ: MELI), which isn’t a U.S. company, is looking more attractive than ever, and it’s up 30% this year. Here’s why it could set you up for life.
MercadoLibre’s main business is e-commerce, and it also has a large and growing fintech segment. It operates in 18 countries in Latin America, and it consistently demonstrates high growth across metrics.
The fourth quarter of 2024 is one snapshot in this exciting story. A few highlights, with currency-neutral numbers: Revenue increased 96% year over year, gross merchandise volume was up 56%, and total payment volume was up 49%.
Although the e-commerce business has been around for several decades already, it’s still growing quickly. Items sold increased 27% year over year in the fourth quarter, and unique buyers increased 24%, setting a record of over 100 million total buyers. Management is taking many actions to attract new customers and keep existing ones loyal, like opening new fulfillment centers and extending free shipping to more items. Same- and next-day shipping orders increased 21% year over year and accounted for 49% of all orders in the quarter.
Monthly active users in the fintech business increased 34% year over year, surpassing 60 million. In the credit business, assets under management increased 129%, and the total credit portfolio was up 74%. MercadoLibre is investing in its credit card business as it marches toward its goal of becoming the largest digital bank in Latin America, and the credit card portfolio was the fastest-growing portion of the overall credit portfolio in the quarter.
What investors want to see is how much more opportunity there is for MercadoLibre to keep doing its thing. The reason its stock can set you up for life is that the remaining opportunity is vast. The company has the first-mover’s edge, as well as the assets, resources, and experience to capture market share as more people come on board to e-commerce and fintech services.
Management says that it’s leading “the shift of offline retail online,” and that’s happening slowly but steadily. E-commerce in Latin America is well behind other regions, lagging by about a decade; it made up 14.4% of total retail sales in 2024 and is expected to reach 17.7% by 2028. In contrast, the U.S. had e-commerce penetration of 28.8% last year; in China, it was 38.1%.
There’s still a lot of digital disruption taking place in Latin American countries, and the financial industry is ripe for action. In Mexico, only half of the adult population has a bank account, and less than a fifth have a credit card. In Brazil, most of the population’s money is still controlled by four large incumbent banks.
MercadoLibre should be able to keep up growth rates as it brings people online and delivers a positive and improved experience.
As a non-U.S. company, MercadoLibre is not affected in the same way by President Donald Trump’s new tariff program, and that’s looking good to investors these days. In fact, the company recently opened its first U.S. distribution center in Texas to service consumers in Mexico, so it has goods moving the other way.
That doesn’t mean it won’t be affected at all, since it could be impacted if what’s going on today triggers a global trade war. But it’s insulated from current U.S. tariff issues and provides a nice hedge for investors who typically buy U.S. stocks, both today and long-term.
One thing MercadoLibre stock is not is cheap. However, although it gained 58% over the past year, its forward P/E ratio is 34, which isn’t astronomical and is below its five-year average.
Will the company’s growth rates begin to slow down? At some point they might, and it’s always harder to keep rates high as the base increases. But with so much more to penetrate in its region and new services and even businesses launching, MercadoLibre should keep growing at robust rates for the foreseeable future (and beyond), providing value for long-term shareholders.
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Jennifer Saibil has positions in Apple and MercadoLibre. The Motley Fool has positions in and recommends Apple, MercadoLibre, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Prediction: Buying MercadoLibre Stock Today Will Set You Up for Life was originally published by The Motley Fool
