My thoughts on $MELI Q1 2026

The quarterly report was strong, despite the stock falling -4.3% after earnings and being down -28% from its 52-week high.

The stock is trading at valuation multiples close to ATL, with EV/Sales at 2.8x and Forward P/E at 36.8x. Given the accelerating revenue growth of +49% YoY, this is a very low valuation. The issue the market sees is declining margins: operating margin fell -19% YoY and net income margin declined -15.6%.

Is this really a problem and a sign of growing competitive pressure?

Martin de los Santos, CFO: “The margin compression reflects our choice to invest in strategic initiatives, and the results of each investment reinforce our conviction that we’re taking the right steps to build the largest and most engaged commerce and fintech platform in Latin America.”

In reality, management sees enormous opportunities and is investing aggressively in future growth and strengthening the company’s competitive position. The results of these investments are already visible in the accelerating high revenue growth. The scale of the LATAM market is truly massive, and I remain positive on management’s initiatives.

Margin pressure is mainly driven by free shipping expansion, logistics capacity investments, and the growing share of credit cards in the portfolio, but these initiatives strengthen the company’s economic moat. Cost per shipment fell 17% YoY in local currency in Brazil, and management expects unit shipping costs to continue declining.

Brazil remains one of the world’s most attractive and competitive e-commerce markets. The introduction of free shipping in Brazil increased conversion by 1 percentage point YoY, and management stated that MercadoLibre is capturing an increasing share of the Brazilian market. Revenue growth in Brazil accelerated to +55%. Mexico, the second-largest revenue region, also accelerated to +62%. Chile is benefiting from higher free-shipping penetration and faster delivery.

E-commerce: GMV growth accelerated to +42% YoY and +36% in constant currency (CC). Revenue growth also accelerated to +47.4% YoY and +39.0% in CC, outpacing GMV growth—which means MercadoLibre is monetizing existing traffic and transaction volume more efficiently. Commerce Take Rate increased to 25.7%.

The number of Successful Items Sold increased 47%, outpacing Commerce revenue growth. I view this positively, as consumers are increasingly purchasing lower-priced everyday items, making marketplace shopping a daily habit and deepening engagement with the MercadoLibre ecosystem.

The number of Unique Marketplace Buyers increased in Q1, while after a strong Q4 there is usually a seasonal decline.

Fintech: TPV growth accelerated to +50% YoY and +54.5% in CC. Revenue growth reached +51.1% YoY and +54% in CC. Fintech Take Rate continues to rise, reaching 4.56%, improving monetization and creating a potential future margin driver.

The fintech segment strengthens the e-commerce ecosystem, while the expanding credit portfolio makes the marketplace even more sticky for users.

The credit portfolio is the key area investors should monitor closely. It nearly doubled to $14.6 billion, driven by credit cards, consumer loans, and merchant credit. Credit portfolio growth is outpacing revenue growth and creating noticeable pressure on margins.

New credit card cohorts require upfront loss reserves and time to mature, reducing NIMAL. Management stated that roughly two-thirds of the reserve-related margin pressure came from credit growth and the increasing share of credit cards in the portfolio.

The share of Credits NPL >90 days increased to 17.6%, which is negative and needs close monitoring. However, in Argentina, NPL metrics in the 15–90 day category improved compared to the prior period.

MercadoLibre implemented LLM-based technologies into marketplace search in Q1 2026. The rollout is already live in Brazil, Mexico, and Argentina. The impact is visible across the entire sales funnel: higher conversion, stronger advertising efficiency, and higher engagement.

At the moment, MercadoLibre sees the rapidly growing LATAM market as a major opportunity and is taking advantage of this by increasing logistics investments and expanding the credit portfolio. I believe this is the right strategy at this stage, which over time should translate not only into high revenue growth but also into improving profitability.

In my view, Q1 was a strong quarter that only reinforced my conviction.