Most investors see a stock down 30% and think of an opportunity. With MELI, it's more complicated than that.

MELI is a buy at the right price, but we think there’s still some downside to go.

This is genuinely one of the best businesses in the world. It's Amazon, PayPal, UPS, and Goldman Sachs for 650 million people, most of whom are yet to shop online. E-commerce penetration in Latin America sits at 12%. China is at ~35%. The average American makes 41 online purchases per year. The average Latin American makes just 7. The runway is generational.

The fintech flywheel is extraordinary. 83M monthly active users. $19.9B in assets under management. The Mercado Pago credit card is the most used on the platform in Brazil, accounting for 50% of transactions, which occur off-app at supermarkets and gas stations. That is a primary banking relationship for people who have never had one. There are 300 million underbanked people in Latin America. MELI is their first bank.

The ad business grew 73% YoY in Q1 2026, 4x the regional industry rate, at near-zero marginal cost, built on 27 years of first-party data no rival can replicate.

Q1 2026 revenue was $8.85B, up 49% YoY, the fastest growth rate in almost four years. GMV reached $19B, up 42%. Fintech TPV hit $87.2B, up 50%. On the surface, extraordinary.

But look underneath.

EPS came in at $8.23, missing consensus forecasts by roughly 7%, the fourth consecutive earnings miss. Operating income fell 20% YoY to $611M, with margins compressing to 6.9%. Net income dropped 15.6% to $417M despite revenue growing 49%. The credit book has grown to $14.6B, up 87% YoY, and no matter what anyone says, growing a loan book this fast is not prudent. Plus, the loans business has lower-quality earnings.

The pattern is consistent. Revenue accelerates. Profits disappoint. Management guides for more investment ahead.

The 30% drawdown has priced in some of the bad news. Not all of it. Margin recovery remains a 2027 story at the earliest.

Great company. The price is still not right. We’ll try and buy once the market capitulates (remember the market sold off Google to 18x earnings last year!).