Mercado Libre's ($MELI) moat is weakening

While MELI looks attractive on first glance (stock down 35% but strong 45% YoY revenue growth), the competitive pressure is intensifying:

• Squeezed from both sides in Brazil: In MELI’s largest market (~50% of revenue), Shopee is attacking their value-conscious buyers, while Amazon competes for the convenience-focused urban buyer (the most valuable e-commerce shoppers)

• The price war is hurting margins: MELI lowered its shipping fees to take on Shopee, but Shopee products are still cheaper on average, with lower seller fees. Temu’s entry has further increased competition for the value-focused buyers

• Logistics arms race: Huge investments by Amazon and MELI in logistics to compete with each other in Brazil. It’s not a winner-take-all market anymore

• Fintech is a double-edged sword: the credit/lending business is riskier than core ecommerce. Rising defaults can severely hurt the whole platform

The stock reflects this. From its July 2025 all-time high of $2,645, MELI has shed ~35%, now trading near $1,718. Q4 EPS declined 12.5% despite 45% revenue growth. You're still paying ~30x forward earnings for a business under siege.

We may be watching the medium-term economics of the industry deteriorate.