Following a significant decline in the share price of Latin American e-commerce and fintech leader MercadoLibre Inc. (MELI.US), Michael Burry, globally renowned for his successful prediction of the 2007 U.S. subprime mortgage crisis, has disclosed a new position: he is buying the stock. He has praised the company as the "Amazon of Brazil, Mexico, and Argentina." The hedge fund manager, whose story was featured in the Hollywood film "The Big Short," wrote on the Substack platform that MercadoLibre's stock price has fallen substantially below his valuation anchor, and he has initiated a formal position. Burry stated that this Latin American e-commerce and fintech giant expects its overall sales to grow significantly by 30% this year, exceeding $40 billion. "I anticipate a long-term annualized investment return of at least 15% over a 15-year or longer timeframe," he wrote.
Shares of Uruguay-based MercadoLibre (MELI.US) plunged 12.7% on Friday, marking their largest single-day drop since November 2024. This decline followed the company's fourth consecutive quarter of net profit falling short of Wall Street consensus estimates. The primary reason cited is the company's rapid expansion amidst intensifying competition in Latin America's digital financial services sector. The stock is now down more than 30% from its record high set in June.
MercadoLibre is one of Latin America's largest integrated online e-commerce and fintech ecosystem companies. Its core operations include the Mercado Libre marketplace (online e-commerce platform) and the Mercado Pago fintech platform (digital payments, loans, investments, and wallet services). It serves hundreds of millions of cumulative consumers across 18 countries, including Brazil, Mexico, and Argentina, functioning as a foundational infrastructure platform for e-commerce and digital finance in the region. Through diversified services like Mercado Envios logistics, Mercado Credito credit, and Mercado Fondo investment products, it has created a deeply integrated digital ecosystem combining "e-commerce/fintech marketplace + digital payments + logistics + digital credit."
Backed by its powerful, long-established e-commerce and fintech platform ecosystem, extensive market coverage, and sustained investments, MercadoLibre is expected to maintain its dominant position and robust growth trajectory in Latin America's e-commerce and fintech sectors for years to come. Market research platform quartr.com forecasts that Latin America's e-commerce market will expand significantly from $151 billion in 2024 to $270 billion by 2028. MercadoLibre, which holds a dominant position in Latin American e-commerce, still has relatively low penetration rates for both its e-commerce and fintech services in the region. This suggests the company has substantial potential for explosive growth in the coming years, leveraging its strong integrated ecosystem.
Why is the "Big Short" investor bullish on MercadoLibre's long-term prospects following the significant price correction? From a fundamental perspective, MercadoLibre's revenue growth remains exceptionally strong. For instance, in Q1 2026, overall revenue grew approximately 49% year-over-year to $8.8 billion, significantly surpassing market expectations, even as profits were pressured by heavy reinvestment. Its e-commerce business is expanding rapidly in core markets like Brazil and Mexico, while its fintech arm, Mercado Pago, continues to see high growth in transaction volume and credit issuance. Overall e-commerce penetration in Latin America remains below that of developed markets, and digital payment and credit service penetration urgently needs to increase. Some projections indicate the Latin American e-commerce market will surpass $200 billion by 2026, growing at a rate about 1.5 times the global average. This growth environment provides MercadoLibre with a strong Total Addressable Market (TAM).
Michael Burry's current optimism for MercadoLibre likely stems from an investment thesis centered on "long-term compound growth + network effects + regional leverage benefits." This involves the company sacrificing short-term profits (e.g., through free shipping and logistics expansion) to gain market share and user scale, thereby strengthening its ecosystem's competitive moat. Simultaneously, the explosive growth of its fintech business is expected to contribute higher profit increments in the future, embedding itself more deeply into users' daily economic lives and creating long-term growth momentum. Furthermore, the current stock price, down roughly 30% from its historical peak, may already reflect market concerns over recent profit growth deceleration. However, given the strategic expansion and regional growth trends, a potential "value mismatch" exists between the current valuation and growth expectations. This leads some hedge fund managers to view this as a moment of "value opportunity + long-term high-return potential."
According to Wall Street analyst expectations compiled by TipRanks, over the past three months, 16 analysts have updated their 12-month price targets for MercadoLibre. The average target price is $2,373.13, with a high of $3,000 and a low of $1,800. The consensus rating leans toward "Strong Buy." Based on the current share price of approximately $1,632.52, the average target price of $2,373.13 implies an upside potential of about 45.4%, highlighting analysts' view that MercadoLibre has significant room for appreciation following its recent steep decline.
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