Why MercadoLibre Stock Is a Smart Buy Right Now

MercadoLibre (NASDAQ:MELI) is the most popular online marketplace and digital payments platform in Latin America, which happens to be the fastest-growing region of the world in terms of e-commerce sales. Not surprisingly, long-term shareholders have made bank on this investment, as the stock price is up 485% over the last three years.

Even so, e-commerce and digital payments are still in the early days of adoption, and MercadoLibre has established a strong competitive position. In this Backstage Pass video, which aired Sept. 14, 2021, Motley Fool contributor Brian Withers shares why he is still excited about this tech company.

Brian Withers: I’m going to talk about MercadoLibre. For those who know me, you will not be surprised. It turned out when we were prepping for the show, everybody picked one of their regional e-commerce favorites, and nobody picked Mercado. I was like, sign me up. [laughs]

I was trying to provide you a little bit different information today. Here’s some slides from its investor presentation it does every quarter. They have 140 million active users, a little bit different than the 500 million that we talked about with JD. But that number has grown every single time that they have published it. And I like this piece here down on the right. “We are the leading technology company in developing e-commerce and payment solutions.” They didn’t say, “We’re the leading e-commerce company.” They said, “We’re the leading technology company,” and I’m going to get back to that.

Huge population in Latin America, 638 [million] — considerably more than the U.S. They have more internet users in Latin America than there are in this population in the U.S., and actually, the online shopper number is really close to what the U.S. is, in around 200 million. They have 18 countries that they serve, but they don’t serve all of their suite of offerings in all the countries, and I’ll show you that.

This has been the business model for a long time. They started out focused on e-commerce, and like many of the other regional e-commerce plays, realized very quickly that they needed to have a payment solution because much of the commercial transactions in Latin America was cash. They had to develop a way for people to pay for goods online. That’s what this Mercado Pago is over here, and they have Mercado Envios, which is shipping. Think of Fulfillment by Amazon, same deal. Mercado Credito, this helps both sellers get loans as well as cash advances for buyers. A little bit of potentially buy now, pay later opportunity. Mercado Shops is similar to Shopify, and it makes it easy for businesses in the region to set up their own web page within the MercadoLibre marketplace. We talked about payments here, and then a Publicidad here is advertising. They are also making money from advertising on the site. Lots of stuff going on here.

Here are the 18 countries…