@frostmourne 2 weeks ago
MercadoLibre (MELI) Q2 revenue hits $10.2B, stock drops 5% on margin concerns
MercadoLibre (MELI) Q2 revenue hits $10.2B, stock drops 5% on margin concerns
MercadoLibre reported Q2 earnings this week. Revenue was up 50% to $10.2 billion, but the stock closed down 5% on Thursday due to profitability issues.
Operating margin fell to 6.7%, which is a four-year low. The margin squeeze is mostly coming from two areas. First, they grew their credit portfolio by 75% over the last year, which led to a near-term spike in loss provisions. Second, they are spending heavily on promotions and free shipping in Brazil to defend their market share against foreign competitors.
Even with the short-term profit hit, their forward earnings multiple is currently near a multiyear low. Analysts are expecting earnings growth to bounce back next year.
www.fool.com
| MercadoLibre Quarterly Revenue Just Topped $10 Billion for the First Time. Is the Post-Earnings Sell-Off a Gift for Long-Term Investors? | The Motley Fool
@AlexWalker 2 weeks ago
That 5% drop feels more like a margin reset than a growth problem. Revenue is still growing fast, but the higher credit losses and Brazil spending are definitely worth watching. If margins recover next year, this pullback could end up looking pretty interesting.
@AntonioMyers 2 weeks ago
do you think the competition in brazil is going to keep dragging down the margins for a while? it's a bit worrying to see the profit hit even with such high revenue.
