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The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really matter, though?

Let's take a look at what these Wall Street heavyweights have to say about MercadoLibre (MELI - Free Report) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.

MercadoLibre currently has an average brokerage recommendation (ABR) of 1.45, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 19 brokerage firms. An ABR of 1.45 approximates between Strong Buy and Buy.

Of the 19 recommendations that derive the current ABR, 14 are Strong Buy and one is Buy. Strong Buy and Buy respectively account for 73.7% and 5.3% of all recommendations.

Brokerage Recommendation Trends for MELI

Check price target & stock forecast for MercadoLibre here>>>

While the ABR calls for buying MercadoLibre, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.

Are you wondering why? The vested interest of brokerage firms in a stock they cover often results in a strong positive bias of their analysts in rating it. Our research shows that for every "Strong Sell" recommendation, brokerage firms assign five "Strong Buy" recommendations.

This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.

With an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near-term price performance. So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision.

Zacks Rank Should Not Be Confused With ABRIn spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.

Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.

Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.

On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

Furthermore, the different grades of the Zacks Rank are applied proportionately across all stocks for which brokerage analysts provide earnings estimates for the current year. In other words, at all times, this tool maintains a balance among the five ranks it assigns.

There is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices.

Should You Invest in MELI?Looking at the earnings estimate revisions for MercadoLibre, the Zacks Consensus Estimate for the current year has declined 2.6% over the past month to $38.09.

Analysts' growing pessimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates lower, could be a legitimate reason for the stock to plunge in the near term.

The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #4 (Sell) for MercadoLibre. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Therefore, it could be wise to take the Buy-equivalent ABR for MercadoLibre with a grain of salt.

CWA Asset Management Group LLC cut its position in MercadoLibre, Inc. (NASDAQ: MELI) by 10.1% during the third quarter, according to its most recent Form 13F filing with the Securities and Exchange Commission (SEC). The fund owned 10,192 shares of the company's stock after selling 1,148 shares during the period. CWA Asset Management

Deciding between GameStop (GME -1.90%) and MercadoLibre (MELI +0.35%) requires balancing a traditional retail recovery against a rapidly expanding fintech and e-commerce ecosystem. Which of these two companies is the better buy for your portfolio today?

GameStop and MercadoLibre represent two very different approaches to the retail sector, ranging from a turnaround story in physical gaming to an e-commerce powerhouse in Latin America. Investors often compare them to determine whether value or high growth offers better long-term potential. This comparison breaks down their financial health and risks to help you decide.

GameStop operates as a specialty retailer selling games, collectibles, and entertainment products through a global network of stores and digital platforms. As of January 31, 2026, the company managed 2,206 stores across the United States, Europe, and Australia under brands like EB Games and Micromania. Its business relies on strong relationships with major vendors, including Nintendo and Sony, which provide the hardware and software central to its sales strategy.

In its 2025 fiscal year (FY), ended Jan. 31, revenue reached $3.6 billion, representing a decline of 5.1% compared to the prior year. Despite lower sales, the company reported net income of $418.4 million, which is a significant increase from the $131.3 million earned in FY 2024. This improvement in the bottom line reflects a substantial jump in net margin to 11.5% from the 3.4% seen in the previous fiscal year.

As of its January 2026 balance sheet, the debt-to-equity ratio was 0.8x, representing total debt, including short-term obligations, divided by shareholder equity. The current ratio, which measures how well current assets cover liabilities due within one year, reached 15.3x. Free cash flow, calculated as cash flow from operations minus capital expenditures, was $597.3 million for the period.

The case for MercadoLibreMercadoLibre operates a vast ecosystem across Latin America that includes its marketplace, Mercado Pago for payments, and Mercado Envíos for logistics. The company is a prominent player among retail stocks and serves millions of buyers and sellers across 18 countries. It recently streamlined its offerings by discontinuing the Mercado Shops service at the end of 2025 to focus on its high-growth fintech and core commerce platforms.

In FY 2025, revenue reached $28.9 billion, marking a robust growth rate of 39.1% year over year. The company generated net income of $2.0 billion during this period, up from $1.9 billion in FY 2024. While revenue grew quickly, the net margin decreased slightly to 6.9% compared to the 9.2% reported in the previous fiscal year.

As of its December 2025 balance sheet, the debt-to-equity ratio was 1.7x. The current ratio was 1.2x. Free cash flow, representing cash flow from operations minus capital expenditures, reached $10.8 billion for the fiscal year.

Risk profile comparisonGameStop faces significant competitive threats from mass merchants and e-commerce platforms like Walmart, Amazon, and Best Buy. The company also carries substantial revenue concentration risk in the collectibles category, especially Pokémon trading cards that are subject to volatile trends. Additionally, the business has exposure to Bitcoin (BTC +1.19%) and must navigate the cyclical nature of gaming hardware releases from manufacturers like Microsoft.

MercadoLibre operates in a competitive Latin American market where global rivals challenge its pricing and net margin. The company is sensitive to macroeconomic shifts such as inflation and currency volatility in major markets like Brazil and Argentina. It also depends on third-party mobile stores from Apple and cloud services from Alphabet, which leaves it vulnerable to platform policy changes.

Valuation comparisonGameStop offers a lower Forward P/E relative to future earnings estimates, whereas MercadoLibre maintains a more attractive P/S ratio based on its sales over the past twelve months.

MetricGameStopMercadoLibreForward P/E14.6x47.8xP/S ratio4.0x2.7xValuation metrics include sourcing from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy in 2026?GameStop and MercadoLibre may both operate in the retail sector, but they are very different companies. The former rose to fame as a video game store, but as consumers shifted to digital games purchased online direct from vendors such as Sony, GameStop's business declined. It's trying to reinvent itself through collectibles, which represented a significant 45% of sales in its fiscal second quarter, ended Aug. 1, 2026.

MercadoLibre is a giant in Latin America, with revenue continuing to grow strongly in a sign of its excellent business health. In the second quarter, the company experienced impressive 50% year-over-year sales growth to $10.2 billion. It is now investing in artificial intelligence to further boost its performance. For these reasons, MercadoLibre is the company I would invest in over GameStop.

MercadoLibre's share price fell in 2026 because its AI spending compressed margins. That was a deliberate move on management's part to invest in the future of the company, and the situation is likely to improve over time as AI delivers efficiency gains.

Robert Izquierdo has positions in Alphabet, Amazon, Apple, Best Buy, Microsoft, Nintendo, Sony Group, and Walmart. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Best Buy, Bitcoin, MercadoLibre, Microsoft, Nintendo, and Walmart. The Motley Fool has a disclosure policy.

MercadoLibre (MELI - Free Report) closed at $1,835.36 in the latest trading session, marking a -1.16% move from the prior day. The stock's performance was behind the S&P 500's daily loss of 1.09%. At the same time, the Dow lost 0.34%, and the tech-heavy Nasdaq lost 2.15%.

Coming into today, shares of the operator of an online marketplace and payments system in Latin America had gained 1.74% in the past month. In that same time, the Retail-Wholesale sector gained 3.71%, while the S&P 500 gained 2.44%.

Investors will be eagerly watching for the performance of MercadoLibre in its upcoming earnings disclosure. It is anticipated that the company will report an EPS of $9.42, marking a 13.22% rise compared to the same quarter of the previous year. At the same time, our most recent consensus estimate is projecting a revenue of $10.64 billion, reflecting a 43.61% rise from the equivalent quarter last year.

For the full year, the Zacks Consensus Estimates project earnings of $38.13 per share and a revenue of $41.73 billion, demonstrating changes of -3.22% and +44.45%, respectively, from the preceding year.

It's also important for investors to be aware of any recent modifications to analyst estimates for MercadoLibre. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the business and profitability.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 2.51% downward. MercadoLibre presently features a Zacks Rank of #3 (Hold).

In terms of valuation, MercadoLibre is currently trading at a Forward P/E ratio of 48.7. This indicates a premium in contrast to its industry's Forward P/E of 15.65.

It is also worth noting that MELI currently has a PEG ratio of 1.3. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. The Internet - Commerce industry currently had an average PEG ratio of 1.25 as of yesterday's close.

The Internet - Commerce industry is part of the Retail-Wholesale sector. Currently, this industry holds a Zacks Industry Rank of 174, positioning it in the bottom 30% of all 250+ industries.

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

Choosing between a deep-value play in Asia and a high-growth leader in Latin America depends on your risk tolerance. Alibaba Group (BABA +0.06%) and MercadoLibre (MELI -0.87%) offer two distinct paths for investors.

Alibaba focuses on dominating the e-commerce and cloud sectors in China while expanding its artificial intelligence capabilities. MercadoLibre has built a massive commerce and fintech ecosystem serving millions across Latin America. Comparing these giants reveals how different regions and valuation levels can impact your long-term investment strategy.

The case for AlibabaAlibaba Group operates as a diversified technology titan, serving consumers and merchants through its massive Chinese and international e-commerce platforms like Lazada. The company also focuses heavily on artificial intelligence, reporting that its consumer-facing Qwen AI platform has surpassed 300 million monthly active users. This focus on AI + Cloud aims to modernize its retail offerings while providing essential digital services for global enterprises.

In the fiscal year ended March 31, 2026, revenue reached approximately $152.7 billion, representing growth of nearly 2.7% compared with the prior fiscal year. Net income for the period was roughly $15.5 billion, resulting in a net margin of close to 10.1%. While revenue continues to grow, the net margin saw a decrease from the 13.1% reported in the prior fiscal year.

As of its March 2026 balance sheet, the debt-to-equity ratio is approximately 0.2x, showing the business relies very little on borrowed money. The current ratio, which measures a company's ability to cover short-term debts with short-term assets, is nearly 1.3x. Free cash flow, defined as cash flow from operations minus capital expenditures, was roughly $10.2 billion during the latest fiscal year.

The case for MercadoLibreMercadoLibre operates a leading e-commerce and fintech ecosystem across 18 Latin American countries, including major markets like Brazil and Mexico. The company collaborates with mobile operating system providers like Apple (AAPL +0.09%) and Alphabet to distribute its applications to roughly 131 million unique buyers. Beyond its marketplace, it provides financial services through Mercado Pago, which handles payments and credit for millions of users.

In the fiscal year ended Dec. 31, 2025, revenue reached close to $28.9 billion, reflecting a significant revenue growth of roughly 39.1% year over year. Net income for the period was approximately $2.0 billion, which equals a net margin of nearly 6.9%. This performance shows the company's ability to maintain profitability while investing heavily in its logistics and payment infrastructure.

According to its December 2025 balance sheet, the debt-to-equity ratio is roughly 1.7x, indicating the company uses significant leverage to fund its expansion. The current ratio is approximately 1.2x, suggesting sufficient liquidity for near-term obligations while its growth makes it a standout among retail stocks. Free cash flow, which equals cash flow from operations minus capital expenditures, was nearly $10.8 billion.

Risk profile comparisonAlibaba faces intense competitive pressure within the Chinese e-commerce market from established rivals and emerging discount platforms. Regulatory oversight in its home market remains a factor, with potential changes in data privacy and antitrust laws affecting daily operations. Geopolitical tensions also present a risk, specifically regarding trade restrictions and the company's ability to source high-end technologies for its cloud business.

MercadoLibre operates in a highly competitive environment where global players like Amazon (AMZN -0.37%) challenge its dominant market share. The company must navigate complex fintech regulations across multiple jurisdictions, often leading to high compliance costs and currency volatility in emerging markets. Additionally, its lending business carries credit risk, as deteriorating economic conditions could lead to higher default rates among its consumer borrowers.

Valuation comparisonAlibaba appears much cheaper based on its Forward P/E, which tracks future earnings estimates, and its P/S ratio measuring sales over the past twelve months.

MetricAlibabaMercadoLibreForward P/E16.6x49.0xP/S ratio1.6x2.7xValuation metrics include sourcing from Financial Modeling Prep (FMP) and may differ from other data providers.

I'd go with MercadoLibre. Commerce and fintech are accelerating simultaneously across Latin America, a region where digital adoption still has an enormous runway ahead. The company crossed $10 billion dollars in quarterly revenue for the first time in 2026, growing at the fastest pace in four years. And the deliberate sacrifice of near-term profit to fund free shipping, credit card expansion, and logistics infrastructure is a bet that seems likely to pay off over time.

Alibaba's stock has pulled back significantly over the past year despite improving business fundamentals. Growth in cloud revenue is being driven by AI demand, and the valuation looks attractive relative to its history. For investors comfortable with the geopolitical risk of owning a Chinese company listed in the U.S., there is a case to be made.

But that geopolitical risk is persistent and hard to plan around. I like that MercadoLibre operates in a more predictable environment and is capturing a market that is still in its early stages. For a patient investor, MercadoLibre's growth trajectory and long runway ahead make it the stronger pick.

NorthCrest Asset Manangement LLC boosted its holdings in shares of MercadoLibre, Inc. (NASDAQ:MELI – Free Report) by 3.7% in the third quarter, according to the company in its most recent Form 13F filing with the Securities and Exchange Commission. The fund owned 7,476 shares of the company’s stock after acquiring an additional 270 shares during the period. NorthCrest Asset Manangement LLC’s holdings in MercadoLibre were worth $13,880,000 at the end of the most recent reporting period.

Several other institutional investors and hedge funds also recently modified their holdings of the business. Dupree Financial Group LLC increased its position in MercadoLibre by 4.6% during the third quarter. Dupree Financial Group LLC now owns 250 shares of the company’s stock worth $432,000 after buying an additional 11 shares in the last quarter. Kaizen Financial Strategies raised its holdings in shares of MercadoLibre by 12.8% in the third quarter. Kaizen Financial Strategies now owns 221 shares of the company’s stock worth $382,000 after acquiring an additional 25 shares during the last quarter. Avity Investment Management Inc. raised its holdings in shares of MercadoLibre by 11.6% in the third quarter. Avity Investment Management Inc. now owns 13,822 shares of the company’s stock worth $23,892,000 after acquiring an additional 1,434 shares during the last quarter. Wedmont Private Capital lifted its position in shares of MercadoLibre by 63.9% in the third quarter. Wedmont Private Capital now owns 300 shares of the company’s stock valued at $557,000 after acquiring an additional 117 shares in the last quarter. Finally, Athena Wealth Management LLC lifted its position in shares of MercadoLibre by 18.4% in the third quarter. Athena Wealth Management LLC now owns 553 shares of the company’s stock valued at $956,000 after acquiring an additional 86 shares in the last quarter. Hedge funds and other institutional investors own 87.62% of the company’s stock.

Analyst Upgrades and Downgrades A number of analysts recently commented on MELI shares. Cantor Fitzgerald decreased their price objective on MercadoLibre from $2,300.00 to $2,200.00 and set an “overweight” rating on the stock in a research note on Monday. Zacks Research raised shares of MercadoLibre from a “strong sell” rating to a “hold” rating in a research note on Monday, July 13th. BTIG Research restated a “buy” rating and issued a $2,150.00 target price on shares of MercadoLibre in a report on Thursday, September 3rd. New Street Research started coverage on shares of MercadoLibre in a report on Wednesday, September 23rd. They issued a “buy” rating and a $2,450.00 target price on the stock. Finally, Susquehanna raised their price target on shares of MercadoLibre to $2,400.00 and gave the stock a “positive” rating in a research note on Tuesday, October 6th. Twelve analysts have rated the stock with a Buy rating and six have issued a Hold rating to the company. According to MarketBeat, MercadoLibre has an average rating of “Moderate Buy” and an average target price of $2,245.62.

Get Our Latest Stock Report on MercadoLibre More MercadoLibre News Here are the key news stories impacting MercadoLibre this week:

Positive Sentiment: MercadoLibre’s integrated commerce and fintech model continues to gain traction. Ecosystem users grew 37%, supporting higher shopping activity, payments adoption, credit usage and customer engagement. MercadoLibre’s Commerce-Fintech Flywheel Gains Strength Positive Sentiment: Several investment analyses remain bullish, citing strong commerce and fintech growth, positive cash flow, a healthy balance sheet and potential catalysts including quick commerce, pharmacy, social commerce and further fintech expansion. Payment volume reportedly exceeded $100 billion, while Brazil’s large revenue contribution could benefit from easing inflation and interest rates. MercadoLibre: Making The Right Investment Moves, Near 13% FCF Yield MercadoLibre’s Accelerated Ecosystem Growth At The Cost Of Margins Neutral Sentiment: Eagle Capital highlighted MercadoLibre as a structural, long-term opportunity, suggesting investors should focus on durable business fundamentals rather than short-term market volatility. This reinforces the long-term case but does not represent a new company-specific catalyst. MercadoLibre: Focusing on Structural Opportunity Over Short-Term Investment Noise Neutral Sentiment: Recent trading attention has increased as investors look ahead to earnings and the expansion of MercadoLibre’s cross-border logistics network. Short-term performance has improved, although longer-term returns and upcoming results remain important tests for the valuation. MercadoLibre: What Is Behind The Growing Attention Now? Negative Sentiment: MercadoLibre’s latest quarter showed a significant profitability trade-off: revenue and financial income increased about 50% to $10.17 billion, but operating income declined 17% to $683 million as management reinvested in growth. Investors may view the strategy as attractive for scale but concerning if margin pressure persists. MercadoLibre Trades Profit for Scale Negative Sentiment: Cantor Fitzgerald lowered its price target from $2,300 to $2,200, signaling more cautious near-term expectations despite maintaining an “overweight” rating and implying substantial upside from recent trading levels. Cantor Fitzgerald Issues Pessimistic Forecast for MercadoLibre MercadoLibre Trading Up 0.1% Shares of MELI opened at $1,892.44 on Tuesday. The stock has a fifty day moving average of $1,864.26 and a two-hundred day moving average of $1,778.45. The company has a debt-to-equity ratio of 0.53, a quick ratio of 1.10 and a current ratio of 1.12. The company has a market capitalization of $95.94 billion, a PE ratio of 51.47, a price-to-earnings-growth ratio of 1.32 and a beta of 1.31. MercadoLibre, Inc. has a fifty-two week low of $1,495.00 and a fifty-two week high of $2,428.00.

MercadoLibre (NASDAQ:MELI – Get Free Report) last issued its quarterly earnings results on Thursday, August 6th. The company reported $9.19 earnings per share for the quarter, topping analysts’ consensus estimates of $8.65 by $0.54. The company had revenue of $10.17 billion for the quarter, compared to analyst estimates of $9.79 billion. MercadoLibre had a return on equity of 26.54% and a net margin of 5.30%. The business’s revenue for the quarter was up 49.8% compared to the same quarter last year. During the same quarter in the prior year, the company posted $10.31 EPS. As a group, analysts forecast that MercadoLibre, Inc. will post 38.29 EPS for the current year.

About MercadoLibre (Free Report)

MercadoLibre, Inc (NASDAQ:MELI) operates a technology platform serving commerce and financial-services customers across Latin America. Its online marketplace connects buyers and sellers, offering products across categories including electronics, apparel, home goods, automotive products and consumer packaged goods.

The company also provides a range of supporting services, including Mercado Pago, a digital payments platform that enables online and in-person transactions, money transfers and other financial services.

See Also Five stocks we like better than MercadoLibre Salesforce Just Got a Rare Double Upgrade—What Changed? OpenAI’s Revenue Scare Could Be a Big Opportunity for Investors China Still Dominates Rare Earths—These 3 U.S. Companies Could Benefit 3 REITs That May Win in a Higher Interest Rate Environment

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SummaryBrazil's election tailwinds, moderating inflationary risks, and ongoing rate easing underscore MercadoLibre, Inc.'s (MELI) future growth prospects, given their exposure at 54.4% of revenues.Their commerce growth flywheel is powered by the aggressive ecosystemic user acquisition efforts across the integrated logistics/fintech/advertising offerings.The positive operating margins/cash flows, healthy balance sheet, and credit risk mitigation contribute to MercadoLibre's resilient prospects amid intensified competition headwinds.Valuation is compelling at EV/Sales of 2.45x, with a 3Y revenue CAGR of +32.3% and a long-term price target of $2,280, thanks to the recent correction.MercadoLibre remains a Buy, despite the near-term risks from the seasonal October weakness, Brazil's October 2026 election outcome, and margin pressure from aggressive growth initiatives. PM Images/DigitalVision via Getty Images

MercadoLibre, Inc.'s (MELI) intensified growth initiatives have driven the accelerated growth prospects across their diversified ecosystem, albeit also triggering the near-term margin headwinds.

For now, given the improved margin of safety from the recent correction/bottoming, I

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SummaryMercadoLibre remains a buy, with valuation attractive despite recent underperformance versus Latin American peers and mixed technicals ahead of Q3 earnings.MELI delivered robust Q2 results: 43% YoY net sales growth, $683M operating income, and $214M adjusted FCF, driven by strong commerce and fintech momentum in Brazil.Key forward catalysts include expansion into quick commerce, pharmacy, and social commerce, with fintech scaling and payment volume surpassing $100B for the first time.Risks include margin pressure from reinvestment, intensifying competition, credit portfolio growth, and currency volatility, but long-term FCF yield and growth prospects remain compelling.sankai/iStock via Getty Images

MercadoLibre (MELI) has lagged the broader Latin American stock market this year. On the heels of a surprise pro-business election outcome in Brazil last week, there's renewed optimism in that corner of the global stock market. The iShares

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Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Key Takeaways MercadoLibre's cross-border trade GMV jumped 60% year over year in Q2 2026 on a currency-neutral basis.Mexico led MercadoLibre's CBT business, while Argentina, Brazil and other markets saw triple-digit growth.MercadoLibre's China fulfillment center saw shipments surge 170% sequentially, improving delivery reliability. MercadoLibre, Inc. (MELI - Free Report) is strengthening its e-commerce presence across Latin America, supported by robust cross-border trade (CBT) growth and investments in fulfillment capabilities. The company's expanding international seller network is broadening product selection, improving pricing competitiveness and enhancing the shopping experience. These initiatives are emerging as key growth drivers for its marketplace business.

Cross-border trade maintained strong momentum in the second quarter of 2026, with foreign-exchange-neutral gross merchandise volume (GMV) up 60% year over year. Mexico remained MercadoLibre's largest CBT market, with growth well above the country's overall marketplace average. Meanwhile, Argentina, Brazil, and other markets recorded triple-digit CBT growth. In smaller markets, CBT's share of GMV nearly doubled from the year-ago period, reflecting broader adoption.

MercadoLibre's China fulfillment center is playing an increasingly important role in this expansion. The facility now serves thousands of sellers, with shipment volume rising 170% sequentially during the quarter. The fulfillment infrastructure has enabled faster deliveries and fewer cancellations, supporting stronger customer satisfaction, retention, and repeat purchases.

Cross-border trade offers MercadoLibre opportunities to strengthen marketplace engagement by expanding access to competitively priced products across categories. Continued improvements in fulfillment efficiency, seller participation, and delivery reliability should help attract more buyers and encourage repeat purchases. Although the initiative remains in its early stages, improving economics and a growing contribution position CBT as a promising long-term growth lever.

How Does MercadoLibre Stack Up Against Its Industry?MercadoLibre, which competes with Amazon.com, Inc. (AMZN - Free Report) and Sea Limited (SE - Free Report) , has seen its shares rise 0.3% over the past three months compared with the industry’s 2.1% increase. While Amazon shares have climbed 3.6%, Sea Limited has fallen 16.4% in the aforementioned period.
 

Image Source: Zacks Investment Research

What Does MercadoLibre's Current Valuation Suggest?From a valuation standpoint, MercadoLibre's forward 12-month price-to-earnings (P/E) ratio is 36.25, higher than the industry average of 20.21. The stock is also trading above its 12-month median level of 34.18.

MercadoLibre is trading at a premium to Amazon (forward 12-month P/E of 22.83) and Sea Limited (18.37).

Image Source: Zacks Investment Research

What Do Earnings Estimates Signal for MercadoLibre?The Zacks Consensus Estimate for MercadoLibre’s current fiscal-year sales implies 44.7% year-over-year growth, while the consensus estimate for earnings per share suggests a 2.8% decline. For the next fiscal year, the consensus estimate indicates a 29% rise in sales and 43.7% growth in earnings.
 

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MELI Investment CaseMercadoLibre’s strong e-commerce momentum, expanding cross-border trade and growing fintech ecosystem reinforce its long-term growth prospects. Rising user engagement, advertising growth and credit portfolio expansion remain key positives. However, margin compression from strategic investments, higher logistics costs and softer consumer demand in certain markets warrant caution. MELI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Amazon and Sea Limited are two e-commerce platforms that have sought to expand into many global markets. However, in Latin American markets like Mexico and Brazil, neither has been able to dethrone the leading e-commerce and financial technology (fintech) platform in the region: MercadoLibre (MELI +0.80%).

The $94 billion market cap giant is growing incredibly quickly and gaining share of commerce transactions across Central and South America. Here's why this Latin American dominance can lead to strong returns for the stock in the coming years.

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Growing online shopping penetration When it comes to payment volume penetration, MercadoLibre has an estimated 25% market share of e-commerce sales across its major operating countries, including Brazil, Mexico, and Argentina. With e-commerce as a percentage of overall retail sales smaller than in the United States, there should be a nice tailwind that lifts MercadoLibre's e-commerce sales in the years ahead.

Gross merchandise volume (GMV) grew 36% in constant currency to $21.9 billion last quarter, with strong growth across all its operating countries. It can grow so quickly because of its enviable product offering, with a wide selection and fast delivery times. Like Amazon, it has a subscription service called Meli+, and is beginning to monetize through advertisements.

Advertising is especially promising, with MercadoLibre estimating it now holds 10% market share in digital advertising in Latin America, up 62% year over year last quarter.

Image source: Getty Images.

Financial services arm MercadoLibre also differentiates itself from e-commerce competitors by layering on its own fintech services, which are a moneymaker and also reinforce the power of its shopping advantages.

This comes in the form of Mercado Pago, which is a spending wallet for shoppers. It offers loans for purchases, among other services, and has recently launched a push to introduce its own credit card to drive everyday spending and even more shopping on MercadoLibre. Credit card users are 2 to 3 times more likely to use both MercadoLibre's marketplace and fintech tools than other MercadoLibre users.

For merchants, Mercado Pago offers payment processing, both on MercadoLibre and off-platform with retail payment terminals. Acquiring payment volume off-platform was $64 billion last quarter, up 44% year over year.

Total financial services revenue was $4.4 billion last quarter, and grew 47% year over year in constant currency. Not only is MercadoLibre one of the fastest-growing e-commerce platforms, but it is also a dominant force in fintech in Latin America.

MELI Revenue (TTM) data by YCharts

Betting on the leading commerce provider in Latin America MercadoLibre's stock is down due to fears of margin compression. The company's operating margin was 6.7% last quarter, translating to just $683 million in earnings.

Management is purposefully driving down margins in the short term for two main reasons. First, it is investing ahead to increase its e-commerce infrastructure, allowing it to now offer rapid free shipping on most items on its marketplace (depending on where shoppers live, of course). Second, it is pushing to get more and more Mercado Pago credit cards into shoppers' hands, which comes with an upfront expense tied to estimated losses from the average client.

But MercadoLibre's profit margin should start expanding again. Since it has a large percentage of its business coming from fintech, I think it is plausible that MercadoLibre's consolidated operating margin can sustainably reach 15%. This is higher than Amazon's e-commerce division, but Amazon doesn't have a massive fintech arm with high margins.

MercadoLibre's trailing revenue is $35 billion, but it grew by 43% in constant currency as of last quarter, meaning revenue won't stay in this area for long. If revenue doubles to $70 billion within the next few years and profit margins revert to 15%, MercadoLibre should generate $10.5 billion in operating earnings, or less than 10 times its current market cap of $94 billion. This makes the stock a nice buy at today's prices.

MercadoLibre's revenue is growing at its fastest pace in four years, yet the stock keeps sliding while profits shrink and earnings estimates drift lower. One Wall Street analyst sees a massive rebound ahead, but his case depends on a single…

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MercadoLibre (NASDAQ:MELI | MELI Price Prediction) currently trades at $1,860.61, while Wall Street’s average price target stands at $2,269.94. That leaves a gap of roughly 22% separating the stock from where analysts think it belongs.

MercadoLibre runs Latin America’s dominant e-commerce marketplace alongside Mercado Pago, a fintech arm spanning payments, credit cards and lending. Quarterly revenue just reached $10.17B, up 49.8%, its fastest growth in four years.

The most bullish analysts goes further. Scotiabank’s Hector Maya holds a Street-high $2,800 target with a Sector Outperform rating. That implies about 50.5% upside, a gap large enough to demand scrutiny.

Record Sales, Shrinking Profits Sent MercadoLibre Lower Margins drove the decline. Operating margin contracted 550bps to 6.7% in Q2, and operating income fell 17.2% to $683M even as sales surged. Management calls it deliberate: lower free shipping thresholds in Brazil, heavy credit card issuance, first-party inventory, cross-border trade from China, PIX discounts, and AI spending roughly $80 million higher than a year ago.

Back-to-back misses had already worried investors. Q3 2025 EPS of $8.32 missed by 10.51%, and Q4 2025 EPS of $11.03 missed by 6.92%. Argentine peso weakness, Mexico tax reform and net debt rising to $6.4B from $4.7B added pressure. Even the Q2 beat failed to help, with shares slipping from $1,893.20 to $1,820.69 a day later.

22 of 26 Analysts Still Call MercadoLibre a Buy Of 26 analysts, 5 give it a Strong Buy, 17 a Buy and 4 a Hold, with zero Sells. Their evidence: ecosystemic users grew 37%, assets under management rose 68% to $23B, and advertising grew 62% FX-neutral. In Brazil, conversion improved 1.1 percentage points after the free shipping change.

Maya cut his target from $3,500 after the margin reset but kept his Outperform call, viewing the dip as an entry point. His thesis rests on the Mercado Envios logistics moat, Mercado Pago converting unbanked users into credit customers, high-margin ads offsetting fulfillment costs, and barriers that keep Shopee and Amazon (NASDAQ:AMZN) at bay.

Credit cards set the timeline. Management says each cohort breaks even after 12 to 18 months, and Brazil issuance jumped to 2.6 million cards from 1.6 million a year earlier. Card NIMAL stands at -2.5%, so maturing cohorts are the swing factor for 2027 earnings.

Estimates are drifting lower, though. The 2026 EPS consensus of $38.167 drew 12 downward revisions against 2 upward over 30 days. Targets are opinions, and the inputs behind them are moderating.

Sea Limited Fell Harder While Amazon Climbed MercadoLibre has company in its decline, but the peer group split sharply.

Sea Limited (NYSE:SE), whose Shopee competes directly in Brazil, dropped 48.89% over 12 months to $96.85. Its average target of $155.11 implies roughly 60.2% upside, with 27 of 29 analysts at Buy or Strong Buy. The story rhymes: revenue grew 48.1% while credit loss provisions jumped 71.5%.

Amazon rose 13.81% over the year to $251.40. Its average target of $330.59 implies about 31.5% upside, and 58 of 60 analysts rate it Buy or better.

Sea holds the group’s largest consensus-implied upside. MercadoLibre’s consensus gap trails both peers, and only Scotiabank’s target pushes it near Sea’s territory.

A 14% Slide Against a Rising S&P 500 At $1,860.61, MercadoLibre sits roughly 22% below its $2,269.94 consensus target from 26 analysts. Shares are down 14.37% over one year and 7.63% year to date. The S&P 500 gained 15.78% over one year and 13.62% year to date.

Momentum just turned. The stock rose 8.65% in the past week, including a 9.67% jump in the latest session. The forward P/E of 33 compares with a trailing 46, inside a 52-week range of $1,495 to $2,428.

MercadoLibre Rewards Patience, but the $2,800 Target Is a Stretch The outlook improves if credit card cohorts mature on schedule and margins steady near current levels while revenue keeps growing above 40%. That path, plus ads and AI efficiencies (customer-service reps fell from 10,000 to 7,000), could revive earnings growth in 2027. The thesis weakens if EPS revisions keep falling, Argentina’s currency weakens again, or rising debt funds a loan book that sours in a Brazilian slowdown.

My take is bullish. The consensus target looks reachable as cohorts mature, while the $2,800 call needs everything to go right. Investors should keep an eye on margins and credit quality in the next earnings report.

Contact [email protected] for any questions or corrections.

Key Takeaways MercadoLibre's Q2 GMV rose 44% to $21.9B, while items sold climbed 45% to 795.4 million.Brazil led growth with FX-neutral GMV up 39%, supported by stronger buyer activity and conversion.Cross-border GMV rose 60% FX-neutral, while China fulfillment center volume jumped 170% sequentially. MercadoLibre (MELI - Free Report) continued to post robust marketplace growth in the second quarter of 2026, with gross merchandise volume (GMV) reaching $21.9 billion, up 44% year over year and 36% on an FX-neutral basis, while items sold rose 45% to 795.4 million. The performance was supported by rising buyer activity and deeper engagement, suggesting multiple levers remain available to sustain GMV momentum.

Brazil remains the primary growth engine, with FX-neutral GMV up 39% year over year and items sold rising 56%. Items sold per unique active buyer increased 19%, while conversion improved 1.1 percentage points year over year, underscoring the sustained impact of the lower free-shipping threshold. New buyer cohorts are purchasing more items across more categories and showing higher retention. Active sellers grew 29%, supported by PIX discounts and lower take rates in selected categories, strengthening selection and price competitiveness.

Beyond Brazil, growth avenues remain visible. Mexico generated 26% FX-neutral GMV growth despite tax reform and a weaker macroeconomic environment. Meanwhile, MercadoLibre is expanding supply into categories such as pharmacy. Argentina delivered 38% FX-neutral GMV growth despite a challenging consumption environment.

Cross-border trade adds another growth layer, with FX-neutral GMV rising 60% and triple-digit growth in Argentina, Brazil and other markets. MercadoLibre’s China fulfillment center also gained momentum, with volume rising 170% sequentially, helping broaden product selection and price points.

With unique active buyers reaching 89.3 million and items sold per buyer up 14% overall, MercadoLibre’s multi-market GMV trajectory reflects strong operational momentum and further room for expansion across Latin America over the longer term.

How Does MercadoLibre Stack Up Against Its Industry?MercadoLibre, which competes with Amazon.com, Inc. (AMZN - Free Report) and Sea Limited (SE - Free Report) , has seen its shares decline 6% over the past three months compared with the industry’s 1% rise. While Amazon shares have climbed 3.1%, Sea Limited has fallen 9.3% in the aforementioned period.
 

Image Source: Zacks Investment Research

What Does MercadoLibre's Current Valuation Suggest?From a valuation standpoint, MercadoLibre's forward 12-month price-to-earnings (P/E) ratio is 33.24, higher than the industry average of 20.11. However, the stock is trading below its 12-month median level of 34.18.

MercadoLibre is trading at a premium to Amazon (forward 12-month P/E of 22.55) and Sea Limited (18.90).

Image Source: Zacks Investment Research

What Do Earnings Estimates Signal for MercadoLibre?The Zacks Consensus Estimate for MercadoLibre’s current fiscal-year sales implies 44.7% year-over-year growth, while the consensus estimate for earnings per share suggests a 2.8% decline. For the next fiscal year, the consensus estimate indicates a 29% rise in sales and 43.7% growth in earnings.
 

Image Source: Zacks Investment Research

The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really matter, though?

Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about MercadoLibre (MELI - Free Report) .

MercadoLibre currently has an average brokerage recommendation (ABR) of 1.45, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 19 brokerage firms. An ABR of 1.45 approximates between Strong Buy and Buy.

Of the 19 recommendations that derive the current ABR, 14 are Strong Buy and one is Buy. Strong Buy and Buy respectively account for 73.7% and 5.3% of all recommendations.

Brokerage Recommendation Trends for MELI

Check price target & stock forecast for MercadoLibre here>>>

The ABR suggests buying MercadoLibre, but making an investment decision solely on the basis of this information might not be a good idea. According to several studies, brokerage recommendations have little to no success guiding investors to choose stocks with the most potential for price appreciation.

Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.

This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.

With an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near-term price performance. So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision.

Zacks Rank Should Not Be Confused With ABRIn spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.

The ABR is calculated solely based on brokerage recommendations and is typically displayed with decimals (example: 1.28). In contrast, the Zacks Rank is a quantitative model allowing investors to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.

It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations. Because of their employers' vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.

On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.

Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company's changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.

Is MELI a Good Investment?In terms of earnings estimate revisions for MercadoLibre, the Zacks Consensus Estimate for the current year has declined 2.1% over the past month to $38.29.

Analysts' growing pessimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates lower, could be a legitimate reason for the stock to plunge in the near term.

The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #4 (Sell) for MercadoLibre. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Therefore, it could be wise to take the Buy-equivalent ABR for MercadoLibre with a grain of salt.

The final quarter of the year is officially underway. Even if we're not starting it out with the advantage of the usual September swoon, if it's like most of them, this year's Q4 should be a relatively good one.

And for a small handful of stocks, the next three months could be particularly bullish. Here's a closer look at why this is the case for four of your best bets right now.

Image source: Getty Images.

1. Viking Therapeutics At first blush, Viking Therapeutics (VKTX -0.17%) looks like just another weight loss drug developer leveraging the same GLP-1 (glucagon-like peptide-1) hormone that Eli Lilly's Zepbound and Novo Nordisk's Wegovy utilize.

Now take a closer look. While the underlying science is the same, Viking's VK2735 is unique in that it's being developed as both an injectable and a pill, but more than that, it's showing promise as a weight-maintenance option with just a monthly dose rather than the weekly injections that Wegovy and Zepbound currently require.

Although the monthly dosing approach is only in phase 1 clinical trials right now, a successful phase 3 trial of the same weight-loss drug could bolster confidence in VK2735, no matter how it's administered. This could make Viking Therapeutics a more serious contender in a weight loss drug market that Morgan Stanley expects to be worth $200 billion by 2030 -- led by GLP-1-based drugs -- with the U.S. market set to more than double in size between now and then.

Just don't tarry if you're interested. Although there are no trial updates explicitly scheduled for the final quarter of this year, the Q3 report, likely coming at the end of this month, will almost certainly include an update on VK2735, which is already on many investors' radars.

2. Alphabet It's not too difficult to see why Alphabet (GOOG +0.24%)(GOOGL +0.24%) shares have drifted lower since May -- the company's heavily involved in artificial intelligence, and AI stocks have lost much of their luster as investors struggle to reconcile its steep developmental costs with its returns so far on these investments.

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Largely lost in this concern, however, is that Alphabet's Google is arguably better positioned than any other name to capitalize on even the slowing growth of the artificial intelligence business.

That's what its second-quarter numbers suggest anyway. While rivals like Amazon and Microsoft both saw their cloud computing businesses grow in Q2 thanks to the continued proliferation of AI, Google Cloud's enormous year-over-year growth of 82% meant it was the only major name in the cloud business to gain rather than lose market share during the second quarter.

Credit Google's sheer reach, mostly. While Microsoft's office productivity software, like Word and Excel, remains crucial to plenty of enterprises, a growing number of institutions are also opting for Google's similar apps. Already familiar with these solutions as well as its search engine and -- quite often -- Google's free-to-use email service Gmail, adding Google's AI offerings (including Gemini) isn't a particularly big leap.

Most investors seem to be missing this right now, along with the fact that the company's search-based advertising arm posted impressive revenue growth of more than 14% during Q2. The third-quarter report coming in late October could force investors to acknowledge just how well Google is holding up on all fronts.

3. SoFi Technologies SoFi Technologies (SOFI +0.95%) shareholders just haven't been able to catch a break this year. After it was announced last year that online bank Chime would discontinue its use of SoFi's technology platform Galileo in early 2026 -- leading to a 27% drop in technology platform revenue in Q1 alone -- in March, SoFi was targeted by a short-seller claiming that its accounting was deceptive. After being halved in Q1, fear has kept this stock from staging any meaningful recovery.

Just don't lose sight of the company's actual performance. Despite all the pessimism and worry, Q2's adjusted revenue improved 40% year over year to $1.2 billion, while its customer count grew 35% to 15.8 million members. SoFi Technologies also raised its full-year revenue guidance from $4.66 billion to $4.75 billion to $4.85 billion. Investors may need to see progress in Q3's update, due near the end of this month, to start believing in this growth.

4. MercadoLibre Last but not least, I'm adding MercadoLibre (MELI +8.25%) to my list of top stocks to buy this month.

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It's been a while since this name's been in the spotlight, mostly because all eyes have been on the rapidly evolving AI market. The last we heard about this South American-based e-commerce outfit last year was that investors weren't thrilled about the cost of free shipping it was offering to a wide swath of Brazil's online shoppers. That offer's still in place, too, explaining why shares are down 25% for the past year.

Now take a step back and look at the bigger picture. While it's pinching profit margins, the company's second-quarter report (posted in August) notes that "users are becoming stickier as the ratio of daily active users to monthly active users reached its highest level ever." It then adds "their relationship with our marketplace is broadening, as the share of users purchasing three or more categories rose almost 6ppts YoY to an all-time high." End result? The quarter's top line of nearly $10.2 billion was up 50% year over year, driven by similar growth in payment and merchandise volumes.

The so-called "Amazon of Latin America" is certainly performing much as the actual Amazon of North America did in its early days, justifying its aggressive spending. Most investors just aren't seeing it yet, or perhaps it would be more accurate to say most investors remain too distracted by AI to notice. It's not clear when they'll notice this overseas company that's doing so well.

For what it's worth, though, analysts expect the market to take notice sooner rather than later. Most analysts currently rate MELI as a strong buy, with a consensus 12-month price target of $2,295.31, which is 36% above this ticker's present price.

Investors may have soured on MercadoLibre (MELI +0.68%) stock. Although the company continues to report considerable revenue growth, increased competition and the rising number of non-performing loans led to a drop in the stock price over the last year.

Currently, I am a shareholder. Still, even if I did not yet own shares, I would buy this top e-commerce company, and the price of around $1,700 per share would not be an obstacle.

Image source: The Motley Fool.

The reason I would buy is that MercadoLibre is not suffering from declining profits so much as deferred profits.

In the first half of 2026, revenue increased by 50% yearly to $10.2 billion. However, with the company less focused on profit right now, net income dropped 11% to $466 million over the same period.

In its e-commerce business, it cut margins to address rising competition in retail. While that means lower profits now, increased market share should ultimately boost profits.

On the fintech side of the business, it has dramatically increased the size of its loan portfolio, and that move increased the number of non-performing loans. Although the company worked to address that issue, it has had to nearly double its provision for doubtful accounts.

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The other issue is its nominal share price, and admittedly, buying just one share may feel pointless. Still, that investment of about $1,700 can give investors full voting privileges and fewer restrictions, while positioning them to benefit from future gains. Moreover, investors can buy MercadoLibre stock at a P/E ratio of 46, a valuation near multi-year lows.

Still, the number that probably matters more than the nominal price is its market cap. At $85 billion, it is a tiny fraction of Amazon's $2.7 trillion market cap, implying significant room for growth.

Amid these efforts, investors should focus on the fact that MercadoLibre is building the infrastructure Latin America's economy will run on for decades. That suggests future investors may regret not buying MercadoLibre stock while it was still in the $1,700-per-share range.

Shares of MercadoLibre, Inc. (NASDAQ: MELI - Get Free Report) have been given an average recommendation of "Moderate Buy" by the eighteen ratings firms that are currently covering the company, Marketbeat Ratings reports. Six equities research analysts have rated the stock with a hold recommendation and twelve have issued a buy recommendation on the company. The

Goldman Sachs sees Nu Holdings doubling from here, yet the stock keeps sliding even as profits hit record highs. Understanding what separates those two realities could define whether this is the buying opportunity of the year or a value trap…

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Nu Holdings (NYSE:NU | NU Price Prediction) currently trades at $12.23. The average price target on Wall Street is $18.69, which means 52.8% upside.

Nu runs Nubank, a digital bank with 139 million customers across Brazil, Mexico and Colombia. It recently posted its first quarter with “more than $1 billion in net income”. Goldman Sachs analyst Tito Labarta repeated his Buy rating and a Street-high $23.00 target, means 88% upside.

The stock keeps falling while profits grow. Shares sit 35.6% below their 52-week high of $18.98.

Record Profits Could Not Stop a 35% Slide From the Highs Weaker credit quality is the main cause. Overdue credit card receivables rose to 12.5% from 11.0%. Stage 3 loan exposures rose to 8.3% from 6.2%. Loans more than 90 days past due rose 35 basis points to 6.9%. The CET1 capital ratio fell to 11.9% from 13.0%.

Taxes add pressure. Nu’s effective combined Brazilian tax rate is 42.5%. Starting next year, new consumption taxes on financial services begin at about 10.85% and rise to 12.50% by 2033.

The latest leg down was sharp. Nu fell 10.04% in a single session and 13.02% over the week, while the S&P 500 slipped 1.03%.

Goldman’s $23 Case Rests on a 30% ROE, Higher ARPAC and Mexico Labarta’s thesis rests on three pillars: Nu keeps a return on equity above 30% with low customer acquisition costs; ARPAC (average revenue per active customer) rises as existing customers add products; and market share gains in Mexico and Colombia extend earnings growth.

Results support that case. ROE hit 33% and ARPAC reached $17. The CEO noted: “We’ve gone from 13 to 17. A lot of the incumbent banks, if you look at the ARPAC, they are 40 to 45.” Mexico has a full banking license and more than 16 million customers, with ARPAC of $12.3 versus $5.6 in Brazil at a similar stage.

Risk-adjusted net interest margin hit a record 12.4%. The CFO called that “sustainable” but noted he never described 12% as a floor. Management expects payroll lending to reach scale in 18 to 24 months and U.S. credit models in 12 to 30 months.

18 of 22 analysts rate Nu a Buy, 3 a Hold, and 1 a Strong Sell. Goldman’s update was a repeat.

Latin American Fintech Is Falling, and Nu Is Falling Fastest The fintech group has sold off, but Nu’s recent drop is steepest.

MercadoLibre (NASDAQ:MELI) trades at $1,712.41, down 12.91% over the past month. Its $2272.28 target means 32.7% upside, with 19 of 24 analysts rating it a Buy.

StoneCo (NASDAQ:STNE) trades at $9.27, down 24.35% year to date. Its $14.41 target means 55.4% upside, but only 9 of 17 analysts rate it a Buy.

StoneCo has the largest consensus upside but weaker Buy support. Nu offers similar upside with stronger confidence. Goldman’s $23 target is the most aggressive in the group.

Nu Trails the S&P 500 by 39 Points This Year At $12.23, Nu trades well below the $18.69 consensus target from 22 analysts, a 52.8% gap. Year to date, the stock is down 26.94%, while the S&P 500 is up 12.26%. Over the past month, Nu lost 14.48% while the index dipped 0.49%.

Nu trades at 15x forward earnings. Management has used about $500 million of its $1.0 billion buyback.

Strong Buy: 5 Buy: 13 Hold: 3 Strong Sell: 1 Credit Trends Will Decide Whether Goldman’s Double Happens The bull scenario requires delinquencies to stabilize and risk-adjusted margins to hold near 12% while Mexico grows under its new license. The bear scenario involves Stage 3 loans continuing to rise and new Brazilian taxes cutting earnings faster than ARPAC growth can offset.

The bull case requires Nu to prove recent credit weakness is seasonal and its AI underwriting can handle Brazil’s downturn. The bear case is that falling capital ratios and rising taxes squeeze a lender expanding into riskier borrowers.

My position is bullish. A 33% ROE at 15x forward earnings leaves room for error. Goldman’s $23 stands as a best-case target, with $18.69 as more realistic.

Contact [email protected] for any questions or corrections.

Key Takeaways MercadoLibre is expanding commerce, fintech, advertising and AI while managing margin and credit risks. TGT is strengthening merchandising, fulfillment and higher-margin businesses while investing in technology. MELI trades near its median valuation, while TGT trades at a modest premium to its recent multiple. As MercadoLibre, Inc. (MELI - Free Report) and Target Corporation (TGT - Free Report) continue to strengthen their respective business models and invest in long-term growth initiatives, a closer look at the two stocks offers useful perspective on their individual fundamentals and strategic priorities.

MercadoLibre is a leading e-commerce and financial technology company in Latin America, with businesses spanning online commerce, digital payments, credit, advertising and financial services. Its growth strategy centers on expanding logistics capabilities, deepening Mercado Pago adoption, scaling advertising and deploying artificial intelligence across its ecosystem. Target is a major U.S. general merchandise retailer with a broad store network and digital platform, focused on merchandising, value, convenience, fulfillment, technology, advertising, membership and marketplace services.

MELI and TGT have market capitalizations of roughly $89 billion and $71 billion, respectively.

The Case for MELIMercadoLibre’s fundamental strength lies in the breadth of its commerce and fintech ecosystem and its ability to deepen engagement across both. The company continues to strengthen logistics, marketplace selection, cross-border trade and Mercado Pago, while advertising and credit provide additional monetization avenues. Users active across both commerce and fintech are materially more valuable than single-platform users, supporting a model built around higher frequency, retention and lifetime value.

The fintech business provides another important growth pillar. Mercado Pago continues to broaden its role across payments, savings and credit, while the company has shifted its credit portfolio toward lower-risk users and strengthened underwriting discipline. AI is also becoming more embedded across search, advertising and product development, helping improve conversion, seller engagement and internal productivity. Together, these capabilities reinforce MercadoLibre’s ecosystem and broaden its long-term growth opportunities across key Latin American markets.

Still, the growth strategy carries meaningful trade-offs. MercadoLibre continues to prioritize long-term engagement over near-term profitability, and initiatives such as lower take rates, consumer discounts and heavier commerce spending have weighed on margins. Higher costs for payment devices and logistics have created additional pressure, highlighting the expense associated with supporting rapid expansion and maintaining a competitive customer proposition.

The expanding credit portfolio also increases exposure to credit-cycle risk, particularly if macroeconomic conditions weaken across major Latin American markets. While current asset quality remains healthy, a deterioration in borrower performance could pressure profitability. MELI’s ecosystem depth, diversified growth engines and technology capabilities remain key fundamental strengths, but margin pressure and rising credit exposure are important factors to monitor.

The Case for TGTTarget benefits from a broad retail platform, strong brand recognition and a store network that serves as both a shopping destination and a powerful fulfillment backbone. The company is sharpening its merchandising strategy around categories that matter most to families, including beauty, food, health and wellness, baby, home and culture-driven products. Its focus on style, design, newness and value helps differentiate the assortment while reinforcing relevance with a broad customer base.

A key advantage is the productivity of Target’s store network. Stores fulfill more than 95% of sales, giving the company a flexible base for in-store shopping, pickup, Drive Up and same-day delivery. Continued spending on remodels, new stores, supply-chain capabilities and inventory tools should support better availability, faster fulfillment and a more consistent customer experience, even as the company continues working to improve execution across all locations.

TGT is also expanding businesses that can strengthen the earnings mix over time. Roundel advertising, Target+ marketplace and Target Circle 360 membership are growing faster than the core business and offer opportunities for higher-margin revenues. At the same time, technology investments in personalization, AI and digital commerce can improve merchandising decisions, customer engagement and operating efficiency, helping offset softer performance in select categories such as home and apparel.

Target’s differentiated merchandising, expanding fulfillment capabilities, growing higher-margin revenue streams and disciplined focus on value provide a solid foundation for sustainable growth. While tariff-related volatility and ongoing spending on wages, training and transformation remain factors to monitor, these pressures are being managed alongside initiatives designed to improve productivity, customer loyalty and long-term profitability.

Earnings Estimate Trends for MELI & TGTThe Zacks Consensus Estimate implies that MELI’s current fiscal-year sales will increase 44.6%, while earnings per share (EPS) will fall 0.7% from the year-ago actuals. For the next fiscal year, the consensus estimate indicates 28.9% growth in sales and 43.3% growth in earnings. The consensus EPS estimates for the current and next fiscal years have trended downward over the past 60 days to $39.11 and $56.05, respectively.
 

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for TGT’s current financial-year sales and EPS suggests growth of 5.1% and 37.8%, respectively, from the year-ago period’s actuals. For the next fiscal year, the consensus estimate indicates a 3.1% rise in sales but a 9.9% decline in earnings. The consensus estimates for EPS for the current and next fiscal year have increased over the past 60 days to $10.43 and $9.40, respectively.
 

Image Source: Zacks Investment Research

MELI & TGT: Stock Price Performance Over the Past YearTarget’s improving retail execution, stronger traffic trends and expanding digital and higher-margin businesses have supported its stock performance, while MercadoLibre shares have remained under pressure despite solid growth across commerce and fintech. Over the past year, shares of MercadoLibre have tumbled 28.9%, whereas Target stock has surged 77.7%.

Image Source: Zacks Investment Research

MELI vs. TGT: A Look at ValuationMercadoLibre’s forward P/E ratio of 34.03 stands slightly below its one-year median of 34.45. Target currently trades at a forward P/E of 16.02, above its one-year median of 14.84. MercadoLibre is trading close to its one-year median valuation, while Target commands a modest premium to its recent historical multiple.

Image Source: Zacks Investment Research

Which Is a Better Bet Between MELI & TGT?Target appears to be the better bet now, supported by improving retail execution, stronger traffic trends, expanding higher-margin businesses and favorable earnings estimate revisions. Its merchandising initiatives, store-based fulfillment capabilities and investments in technology also strengthen its operating foundation. MercadoLibre retains compelling long-term growth potential through its commerce, fintech, advertising and AI-driven ecosystem, but margin pressure, credit exposure and downward earnings estimate revisions temper the near-term picture. While valuation profiles differ, Target’s improving fundamentals, positive estimate momentum and stronger share price performance make it the more compelling choice at this stage.

MELI currently carries a Zacks Rank #4 (Sell), whereas TGT has a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the latest trading session, MercadoLibre (MELI - Free Report) closed at $1,754.13, marking a -2.51% move from the previous day. This change lagged the S&P 500's 0.03% loss on the day. At the same time, the Dow lost 0.31%, and the tech-heavy Nasdaq gained 0.01%.

The operator of an online marketplace and payments system in Latin America's shares have seen a decrease of 7.75% over the last month, not keeping up with the Retail-Wholesale sector's loss of 5.06% and the S&P 500's gain of 0.53%.

Market participants will be closely following the financial results of MercadoLibre in its upcoming release. The company is expected to report EPS of $9.42, up 13.22% from the prior-year quarter. Simultaneously, our latest consensus estimate expects the revenue to be $10.64 billion, showing a 43.61% escalation compared to the year-ago quarter.

For the annual period, the Zacks Consensus Estimates anticipate earnings of $39.11 per share and a revenue of $41.78 billion, signifying shifts of -0.74% and +44.59%, respectively, from the last year.

Investors should also take note of any recent adjustments to analyst estimates for MercadoLibre. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. As of now, MercadoLibre holds a Zacks Rank of #4 (Sell).

Digging into valuation, MercadoLibre currently has a Forward P/E ratio of 46. This valuation marks a premium compared to its industry average Forward P/E of 15.58.

Also, we should mention that MELI has a PEG ratio of 1.23. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. As the market closed yesterday, the Internet - Commerce industry was having an average PEG ratio of 1.17.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This industry, currently bearing a Zacks Industry Rank of 174, finds itself in the bottom 30% echelons of all 250+ industries.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

State Street Corp raised its holdings in MercadoLibre, Inc. (NASDAQ:MELI – Free Report) by 7.7% in the second quarter, according to the company in its most recent disclosure with the SEC. The fund owned 459,748 shares of the company’s stock after buying an additional 32,734 shares during the quarter. State Street Corp owned about 0.91% of MercadoLibre worth $780,372,000 at the end of the most recent reporting period.

Several other institutional investors have also added to or reduced their stakes in MELI. BlackRock Inc. acquired a new position in MercadoLibre during the 2nd quarter valued at approximately $2,246,015,000. Jupiter Topco LLC acquired a new stake in shares of MercadoLibre during the second quarter worth $917,123,000. Linonia Partnership LP grew its holdings in shares of MercadoLibre by 325.1% during the second quarter. Linonia Partnership LP now owns 553,788 shares of the company’s stock valued at $939,994,000 after buying an additional 423,527 shares during the last quarter. Capital Research Global Investors grew its holdings in shares of MercadoLibre by 22.5% during the fourth quarter. Capital Research Global Investors now owns 2,225,031 shares of the company’s stock valued at $4,481,812,000 after buying an additional 408,939 shares during the last quarter. Finally, Norges Bank acquired a new position in shares of MercadoLibre in the 4th quarter valued at $597,045,000. Institutional investors and hedge funds own 87.62% of the company’s stock.

MercadoLibre Stock Performance Shares of MELI stock opened at $1,799.24 on Thursday. MercadoLibre, Inc. has a 52-week low of $1,495.00 and a 52-week high of $2,548.50. The company has a quick ratio of 1.10, a current ratio of 1.12 and a debt-to-equity ratio of 0.53. The stock has a market cap of $91.22 billion, a PE ratio of 48.93, a price-to-earnings-growth ratio of 1.25 and a beta of 1.31. The business has a 50-day simple moving average of $1,877.24 and a 200-day simple moving average of $1,770.44.

MercadoLibre (NASDAQ:MELI – Get Free Report) last announced its quarterly earnings results on Thursday, August 6th. The company reported $9.19 earnings per share for the quarter, beating the consensus estimate of $8.65 by $0.54. The company had revenue of $10.17 billion during the quarter, compared to analysts’ expectations of $9.79 billion. MercadoLibre had a return on equity of 26.54% and a net margin of 5.30%.MercadoLibre’s quarterly revenue was up 49.8% on a year-over-year basis. During the same period last year, the business earned $10.31 earnings per share. On average, equities analysts expect that MercadoLibre, Inc. will post 39.11 EPS for the current year. MercadoLibre News Roundup Here are the key news stories impacting MercadoLibre this week:

Positive Sentiment: New Street Research initiated coverage with a Buy rating and a $2,450 price target, implying substantial upside from the referenced price. The new coverage provides additional support for the bullish investment case. Positive Sentiment: MercadoLibre’s advertising business continues to accelerate. Reports say advertising exceeded 10% of Latin America’s digital advertising market in the second quarter of 2026, aided by artificial-intelligence tools and expanding video inventory. MercadoLibre’s Advertising Business Keeps Gaining Momentum Positive Sentiment: One equity analysis argues that MercadoLibre’s integrated ecosystem—including e-commerce, payments and advertising—outweighs key risks, reinforcing the long-term growth thesis. MercadoLibre: Ecosystem Strength Outweighs Risk Factors Neutral Sentiment: A comparison of MercadoLibre and Coupang examines which e-commerce stock offers the better investment opportunity in 2026. The article may influence investor preferences but does not represent a new company-specific development. Coupang vs. MercadoLibre: Which E-Commerce Stock Is a Better Buy in 2026? Neutral Sentiment: Coverage also highlighted MercadoLibre’s advertising growth and recent trading volatility, while another report noted a prior gain before the latest pullback. MercadoLibre stock holds near USD 1,826 as ad growth accelerates Negative Sentiment: Reports of a sharp post-market decline and subsequent volatility suggest investors may be taking profits after recent moves. This short-term trading pressure is offsetting positive fundamental and analyst news. MELI stock falls 3.59 percent after the close Neutral Sentiment: Michael Burry’s portfolio update focused primarily on bearish bets against artificial-intelligence and semiconductor stocks, with no specific negative catalyst for MercadoLibre identified. Michael Burry’s updated stock portfolio Wall Street Analysts Forecast Growth A number of analysts have commented on MELI shares. JPMorgan Chase & Co. lifted their price target on MercadoLibre from $1,900.00 to $2,150.00 and gave the stock a “neutral” rating in a research report on Tuesday, August 11th. Weiss Ratings reaffirmed a “hold (c)” rating on shares of MercadoLibre in a report on Thursday, July 2nd. New Street Research began coverage on MercadoLibre in a research report on Wednesday. They issued a “buy” rating and a $2,450.00 target price on the stock. BTIG Research reissued a “buy” rating and set a $2,150.00 price target on shares of MercadoLibre in a research report on Thursday, September 3rd. Finally, Zacks Research upgraded shares of MercadoLibre from a “strong sell” rating to a “hold” rating in a research note on Monday, July 13th. Twelve research analysts have rated the stock with a Buy rating and six have issued a Hold rating to the stock. Based on data from MarketBeat.com, the stock presently has a consensus rating of “Moderate Buy” and an average price target of $2,283.12.

Check Out Our Latest Report on MELI

About MercadoLibre (Free Report)

MercadoLibre, Inc is a technology company that operates an online commerce and financial services ecosystem across Latin America. Founded in 1999 by Marcos Galperin, the company began as an online marketplace and has expanded into a broad platform serving consumers, merchants and businesses.

Its marketplace enables users to buy and sell products across categories, while Mercado Pago provides digital payments, online checkout, money transfers and other financial services. The company also offers Mercado Envíos logistics and fulfillment services, Mercado Ads advertising solutions, and credit products through Mercado Crédito.

See Also Five stocks we like better than MercadoLibre Chips to Bots: Qualcomm’s Agentic AI Breakout Ciena Fell 40%—Now One Analyst Sees 50% Upside Energy Transfer Taps the AI Power Boom Viking’s Obesity Edge May Be Staying Power, Not Weight Loss Want to see what other hedge funds are holding MELI? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for MercadoLibre, Inc. (NASDAQ:MELI – Free Report).

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of MELI either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Key Takeaways MercadoLibre trades at 35.63X forward P/E, above its industry average and key peers. Second-quarter operating margin fell to 6.7% as investments and logistics costs pressured profitability. Revenue topped $10B for the first time, while fintech monthly active users grew 30% year over year. MercadoLibre, Inc. (MELI - Free Report) has a premium valuation, with its forward P/E multiple well above the industry average and key peers. The stock is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 35.63X, above the industry average of 20.09X and its one-year median of 34.46X. 
 

Image Source: Zacks Investment Research

MELI also trades at a sizable premium to key peers. Amazon.com, Inc. (AMZN - Free Report) carries a forward P/E of 22.26X, while Sea Limited (SE - Free Report) trades at 20.41X. MercadoLibre's strong growth profile supports some valuation premium, but the current multiple leaves less room for execution setbacks. With profitability pressured by investments and earnings estimates moving lower, sustaining the premium will depend on continued growth and improved operating leverage.

MercadoLibre Faces Near-Term ChallengesA key concern for MercadoLibre is mounting pressure on profitability as management continues to prioritize long-term growth and engagement over near-term margins. In the second quarter of 2026, the operating margin was 6.7%, down 550 basis points year over year, reflecting higher investments across the business.

In Brazil, MercadoLibre lowered seller take rates in selected verticals and offered discounts to consumers using PIX. These initiatives are aimed at improving selection, pricing and engagement, but management acknowledged that they contributed to margin compression during the quarter. Higher logistics expenses stemming from energy costs also weighed modestly on profitability, with the company choosing to absorb part of the increase rather than fully pass it on to users.

The acquiring business is also facing additional cost pressure. Higher chip costs have made point-of-sale devices more expensive, while MercadoLibre’s decision to build device inventory in Mexico created an upfront margin drag, as the devices are sold at a loss to encourage adoption. Management indicated that the elevated device-cost environment could persist in the near term.

Mexico presents further challenges. Management cited tax reform and a weaker macroeconomic environment as headwinds to commerce growth. Overall, lower take rates, promotional spending, higher logistics costs and rising device expenses could keep MercadoLibre’s margins under pressure in the near term.

MELI Stock Lags the Broader MarketShares of MercadoLibre have slumped 26.3% over the past year compared with the industry's and the Zacks Retail – Wholesale sector's respective declines of 6.3% and 7.5%. The stock has also underperformed the S&P 500's 14.8% gain over the same period. 
 

Image Source: Zacks Investment Research

MercadoLibre has underperformed Amazon as well. AMZN’s shares have advanced 8.6% during the period. Sea Limited, however, has fared worse, with SE stock declining 46.9%.

MercadoLibre’s Growth Engines Remain StrongDespite the near-term pressures, MercadoLibre continues to benefit from healthy momentum across commerce and fintech. Second-quarter revenues surpassed $10 billion for the first time, supported by strong marketplace activity, expanding buyer engagement and continued growth in Brazil.

Cross-border trade is broadening merchandise selection and strengthening the marketplace, while Mercado Pago continues to deepen customer engagement through payments, savings and credit. Fintech monthly active users increased 30% year over year, and assets under management remained on a strong growth trajectory.

Advertising represents another promising growth avenue, helped by increasing adoption of AI-driven tools. Importantly, users active across both the marketplace and Mercado Pago are growing rapidly and generate greater activity across the ecosystem, reinforcing MercadoLibre's commerce-fintech flywheel.

Earnings Estimates Trend Lower for MercadoLibreRecent estimate revisions add another layer of caution. The Zacks Consensus Estimate for MercadoLibre's current fiscal-year earnings per share has declined from $41.00 to $39.11 over the past 60 days. For the next fiscal year, the consensus estimate has fallen from $59.18 to $56.05.
 

Image Source: Zacks Investment Research

The downward revisions indicate softer earnings expectations despite the company's strong top-line expansion. Given MELI's premium valuation, continued negative estimate revisions could make it harder to justify the stock's current multiple.

How to Play MELI Stock?MercadoLibre's long-term growth prospects across e-commerce, fintech, advertising and credit remain attractive, but the near-term setup warrants caution. MELI's 35.63X forward P/E remains well above the industry and key peers even after its sizable share-price decline. Meanwhile, aggressive investments are weighing on margins, Mexico faces near-term headwinds and earnings estimates have moved lower. These factors make the stock's current valuation harder to justify without stronger earnings momentum. Investors may therefore prefer to remain cautious on MELI and wait for greater visibility on margin improvement and stabilization in earnings estimates before taking a more constructive stance.

MELI currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors often debate whether to prioritize specialized niche leaders or regional giants. Choosing between Chewy (CHWY -3.04%) and MercadoLibre (MELI -0.47%) requires deciding which growth engine is a better buy today.

Chewy focuses on the essential pet care market in the United States, providing everything from food to healthcare services. MercadoLibre serves as the dominant e-commerce and fintech hub for Latin America. The comparison exists because both represent digital-first leaders in the consumer discretionary space that rely on high customer loyalty.

The case for ChewyChewy sells nearly 190,000 pet products and services to roughly 21.7 million active customers. In its latest annual report, filed for the fiscal year 2025, the company highlighted its position among retail stocks while expanding its physical clinic network. It maintains relationships with roughly 4,000 brands and supports nearly 20,000 veterinary practices via its PracticeHub platform. The Autoship program continues to drive recurring sales from loyal pet parents.

In FY 2025, revenue reached nearly $12.6 billion, representing growth of approximately 6.2% compared to the previous year. The net income for this period was roughly $222.8 million. This result represents a net margin, or the percentage of revenue remaining after all expenses, of approximately 1.8%. These figures show a business that is consistently profitable while continuing to expand its footprint in the pet healthcare space.

As of its February 2026 balance sheet, the debt-to-equity ratio was nearly 1.1x, which compares total debt to shareholder equity. The current ratio, which measures the ability to pay short-term bills with current assets, was roughly 0.9x. Free cash flow, or the cash remaining after capital investments, reached nearly $562.4 million. Note that stock-based compensation represented roughly 43.1% of operating cash flow, which inflates reported cash generation since SBC is a non-cash expense added back in the cash flow statement.

The case for MercadoLibreMercadoLibre operates a massive ecosystem in Latin America, combining its e-commerce marketplace with its fintech division, Mercado Pago. The marketplace serves as a hub for third-party sellers, while the fintech arm provides digital accounts, payment processing, and credit services. According to its latest annual report, filed for the fiscal year 2025, the company also leverages a proprietary logistics network, Mercado Envios, to ensure fast delivery. This integrated approach, which includes the Meli+ loyalty program, helps drive high engagement among its 131 million unique buyers.

During FY 2025, revenue climbed to nearly $28.9 billion, a substantial 39.1% increase over the prior year. Net income for the year was approximately $2.0 billion. This resulted in a net margin of close to 6.9%, which reflects the profitability of both the marketplace and the higher-margin financial services segments. These results highlight the ability of the business to scale rapidly across diverse geographic markets.

As of its December 2025 balance sheet, the debt-to-equity ratio was roughly 1.7x. This metric shows the relationship between total debt and shareholder equity. The current ratio was approximately 1.2x, suggesting it has more than enough short-term assets to cover its immediate obligations. Free cash flow, or the cash remaining after capital investments, was nearly $10.8 billion. This strong cash generation supports its ongoing expansion into new financial products and logistics hubs.

Risk profile comparisonChewy faces intense competition from established giants like Amazon (AMZN +1.94%) and various mass-market retailers that have larger fulfillment infrastructures. The company is also navigating risks related to its acquisition of Modern Animal and the rapid scale-up of its physical veterinary clinics. Furthermore, it remains highly dependent on third-party shipping providers. Any disruption in its supply chain or fulfillment network could immediately impact its ability to remain profitable.

MercadoLibre operates in a dynamic environment with intensifying pressure from global players like Amazon and low-price entrants from Asia. Its fintech operations face extensive and evolving financial regulations in every country where it operates, which increases the cost of compliance. Additionally, the company is exposed to significant currency volatility and inflationary pressures in key markets like Argentina and Brazil. Protecting its infrastructure from cyberattacks and fraudulent activities is also a critical, ongoing challenge for the business.

Valuation comparisonChewy features a lower Forward P/E, which measures price against future earnings estimates, and a lower P/S ratio, which compares market value to revenue.

MetricChewyMercadoLibreForward P/E25.7x50.6xP/S ratio0.7x3.4xValuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

I'd go with MercadoLibre. The scale of the opportunity it is chasing and the pace at which it is capturing it put it in a different category entirely from Chewy. To Chewy's credit, it is a well-run business with a loyal customer base that keeps spending. Autoship sales account for the vast majority of revenue and active customers are growing. For investors who want a steady, predictable consumer business, Chewy has its appeal.

But Chewy is growing at a modest pace in a pet market that is still under pressure from cautious consumer spending. The pet market in the U.S. is large but not expanding the way Latin America's digital economy is, and that limits how fast Chewy can grow from here.

MercadoLibre crossed $10 billion in quarterly revenue for the first time in Q2 2026, growing at the fastest pace in four years, with commerce and fintech accelerating simultaneously across Latin America. The company is sacrificing some near-term profit to fund free shipping, credit card expansion, and logistics infrastructure. But in a region where the e-commerce and fintech markets are still wide open, that kind of investment seems likely to pay off over time.

For a long-term investor, the size of MercadoLibre's opportunity and the pace at which it is capturing it make it the stronger pick right now.

When deciding whether to buy, sell, or hold a stock, investors often rely on analyst recommendations. Media reports about rating changes by these brokerage-firm-employed (or sell-side) analysts often influence a stock's price, but are they really important?

Let's take a look at what these Wall Street heavyweights have to say about MercadoLibre (MELI - Free Report) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.

MercadoLibre currently has an average brokerage recommendation (ABR) of 1.47, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 18 brokerage firms. An ABR of 1.47 approximates between Strong Buy and Buy.

Of the 18 recommendations that derive the current ABR, 13 are Strong Buy and one is Buy. Strong Buy and Buy respectively account for 72.2% and 5.6% of all recommendations.

Brokerage Recommendation Trends for MELI

Check price target & stock forecast for MercadoLibre here>>>

While the ABR calls for buying MercadoLibre, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.

Are you wondering why? The vested interest of brokerage firms in a stock they cover often results in a strong positive bias of their analysts in rating it. Our research shows that for every "Strong Sell" recommendation, brokerage firms assign five "Strong Buy" recommendations.

This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.

With an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near-term price performance. So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision.

Zacks Rank Should Not Be Confused With ABRIn spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.

Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.

It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations. Because of their employers' vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.

On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.

There is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices.

Is MELI Worth Investing In?In terms of earnings estimate revisions for MercadoLibre, the Zacks Consensus Estimate for the current year has remained unchanged over the past month at $39.11.

Analysts' steady views regarding the company's earnings prospects, as indicated by an unchanged consensus estimate, could be a legitimate reason for the stock to perform in line with the broader market in the near term.

The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for MercadoLibre. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

It may therefore be prudent to be a little cautious with the Buy-equivalent ABR for MercadoLibre.

MercadoLibre (MELI +1.59%) might not be a household name in the U.S., but it's often called the Amazon (AMZN -0.20%) of Latin America for its e-commerce dominance in that region and for the way it's built a massive network of competitive advantages.

That includes businesses in e-commerce, fintech, logistics, credit, and asset management.

In addition to its similarities to Amazon as a business, MercadoLibre's stock performance has mirrored Amazon's, up nearly 5,000% since it went public. However, MercadoLibre just achieved a new growth milestone that no other e-commerce company, including Amazon or Shopify (Nasdaq: SHOP), or any other company has been able to do.

Image source: Getty Images.

Initiating the 30/30 clubIn baseball, the 30/30 club refers to a player who hits 30 home runs and steals 30 bases, but we may need a new definition of the term following MercadoLibre's recent run.

The Latin American e-commerce company just became the first publicly traded company of a significant size to record 30 straight quarters of at least 30% revenue growth, as the chart below shows.

MELI Revenue (Quarterly YoY Growth) data by YCharts

As you can see, that streak began in 2019 and has continued since. In fact, the company has even accelerated its revenue growth recently by investing in faster delivery and lowering free shipping thresholds. During that time, the company grew from $473 million in Q1 2019 to $10.2 billion in Q2 2026, representing more than 20-fold growth.

What's particularly impressive about that streak is that it included both the pandemic, during which e-commerce growth soared, and the post-pandemic normalization, when nearly every e-commerce stock plunged as growth slowed dramatically.

The chart below shows how MercadoLibre's growth compares with that of Shopify and Amazon over the last ten years.

MELI Revenue (Quarterly YoY Growth) data by YCharts

As you can see, both Amazon and Shopify have historically delivered strong growth, but their post-pandemic drops were more severe than MercadoLibre's. That kept Shopify out of the 30/30 club. Amazon, on the other hand, faced the law of large numbers, as its growth seems to have slowed because the company has gotten so big. However, even earlier in its history, its cyclical nature made it unable to deliver such a streak as revenue growth slowed significantly during times like the dot-com bust and the financial crisis.

The secret to MercadoLibre's successMercadoLibre maintained its streak through the post-pandemic era because it is more than just an e-commerce business. Its fintech business, for example, has been growing faster than e-commerce for a long time, and it's extended its fintech business to serve brick-and-mortar stores. It's also expanded its lending and logistics businesses at the same time.

MercadoLibre benefits from having a long growth runway in Latin America. Online shopping and online payments aren't as common in that region as they are in the U.S., so the company should benefit as these behaviors gain adoption.

Additionally, the company primarily operates in three countries: Brazil, Argentina, and Mexico, giving it ample white space to expand across the rest of Latin America.

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Is MercadoLibre a buy?What's surprising about MercadoLibre's recent stock performance is that shares are actually down substantially from their all-time high, even as the company has achieved this unprecedented streak.

The stock is currently down 27% from its 2025 peak, with profits falling due to investments in areas like logistics amid intensifying competition.

Those investments are worth making, and MercadoLibre has the network effects and competitive advantages to continue growing despite competition, especially since there's still significant growth opportunity in the market.

The recent sell-off offers an appealing discount for MercadoLibre shares. Profits are expected to return to growth, and the company has proven that it has an unmatched ability to deliver high levels of revenue growth over a long period of time.