MercadoLibre Inc. "Resetting Margin Expectations; Reiterate Neutral" (Neutral)

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MercadoLibre Inc. "Resetting Margin Expectations; Reiterate Neutral" (Neutral)

Global Research

12 May 2026ab

MercadoLibre Inc. Equities

ArgentinaResetting Margin Expectations; Reiterate

Neutral Internet Services

12-month rating Neutral

12m price target US$1,750.00Incorporating recent trends and cutting estimates again after 1Q

Prior : US$2,050

We incorporate the 1Q26 miss to our numbers and cut our EBIT and net income

estimates for MELI by ~20% in 2026-30E following a combination of i) faster top-line Price (12 May 2026) US$1,578.78

growth, which was more than offset by ii) higher than expected expenses across the RIC: MELI.O BBG: MELI US

board (ongoing investment cycle); and iii) further pressure coming from loan loss

provisions. We cut our PT to US$1,750 (from US$2,050) and reiterate our Neutral Trading data and key metrics

rating. The results reinforced our view that rising engagement metrics are coming 52-wk range US$2,613.63-1,557.30

at a higher than expected cost, and margins recovery should take longer to Market cap. US$80.0b

materialize - see our recent DG to Neutral here. We are now 8-17% below consensus Shares o/s 50.7m (COM)

in 26/27E. Trading at 43x/31x PE in 26/27E, we believe MELI appears fairly valued Free float 92%

given the current landscape of growth, peers' valuation and uncertainties related to Avg. daily volume ('000) 578

competition. Avg. daily value (m) US$1,010

Common s/h equity (12/26E) US$8.71b

Credit provisions in the spotlight; asset quality trends relatively stable YoY P/BV (12/26E) 9.2x

Amid the intense competitive e-commerce landscape in LatAm and the ongoing Net debt to EBITDA (12/26E) NM

investments, we note that, while margin compression was broad-based, the key

drag for margins YoY this quarter was related to credit provisions.