MercadoLibre (NASDAQ:MELI), often called the “Amazon of Latin America,” has been a monster growth stock for nearly two decades. Since its 2007 IPO, the company has delivered staggering 5,760% total returns for shareholders — crushing the S&P 500’s 556% gain over the same period.
Yet since hitting its all-time peak at the end of June, the stock has shed 36% of its value. Revenue, meanwhile, continues expanding at a phenomenal 50% compound annual growth rate (CAGR) over the past five years. As a result, MELI’s price-to-sales (P/S) ratio has never been cheaper. Is this Latin American titan simply a stock too cheap to ignore?
Why MELI Stock Has Dropped 36% From Its Peak
The decline stems from a mix of competitive pressures and investor concerns over near-term profitability. Shopee, the Southeast Asia-based e-commerce arm of Sea Limited (NYSE:SE), has aggressively expanded into key Latin American markets like Brazil and Mexico. With ultra-low pricing, fast logistics, and fintech add-ons, Shopee is chipping away at MercadoLibre’s dominance, forcing the company to match discounts and invest heavily in free shipping thresholds and delivery networks.
Other factors compound the unease. After its fourth-quarter earnings release in February, MercadoLibre shares plunged as much as 10% in a single day. Revenue surged 45% year-over-year to $8.8 billion — beating estimates — but operating margins compressed to 10.1% from 13.5% in the prior year. Management openly admitted to “moat-building” spending: 5 to 6 percentage points of margin were deliberately plowed back into logistics upgrades, cross-border trade, credit-card scaling, and first-party inventory. Earnings of $11.03 per share also missed consensus estimates, triggering analyst downgrades and fears that rapid expansion is finally catching up to profits.
Broader Latin American macroeconomic volatility — currency swings in Argentina and Brazil, plus lingering inflation — has added uncertainty, even though MercadoLibre reports strong currency-neutral growth. The combination of intensifying rivalry and margin discipline sent the stock tumbling from its June high of $2,614 to current levels around $1,680 per share.
Revenue Growth Defies the Skeptics
Despite the share-price pressure, MercadoLibre’s underlying business remains a growth powerhouse. Net sales have risen a cumulative 627% since Q4 2020, equating to a 49% CAGR. Full-year 2025 revenue reached $28.9 billion, up 39% in U.S. dollars (52% in local currency). Unique active buyers topped 120 million, while both commerce and fintech segments — Mercado Pago payments and credit — posted record engagement.
This is no fluke. MercadoLibre has methodically built an integrated ecosystem that combines marketplace leadership with payments, lending, and logistics across 18 countries. Investments that are currently pressuring margins are simultaneously widening its moat: faster delivery times, higher seller retention, and deeper customer stickiness. Even as Wall Street fixates on short-term profitability, the company continues compounding at elite rates unseen in most mature e-commerce players.
Valuation Hits Rock Bottom
The disconnect between growth and price has created a historic bargain. MercadoLibre now trades at just 2.9x trailing sales — its cheapest valuation since going public and a far cry from the 25x+ peaks reached in 2020-2021. Back then, the market priced in endless expansion during the pandemic-fueled e-commerce boom; today, the same market appears to be pricing in permanent problems that simply do not exist in the fundamentals.
A strong case can be made that MercadoLibre was wildly overvalued at those prior highs. An equally compelling argument suggests it is extremely undervalued now. With a market cap around $85 billion against $28.9 billion in revenue and sustained 40%+ top-line growth — Wall Street also still forecasts 36% annual earnings growth long-term — the multiple compression has been dramatic. Patient investors who bought at previous troughs have been richly rewarded as the business scaled.
Key Takeaway
Cheap valuations often signal genuine business problems — stagnant demand, eroding market share, or structural decline. MercadoLibre shows none of those flaws. Its foundation is rock-solid: a dominant platform position in a region of 650 million people with rising internet penetration and digital-payment adoption. The company is growing smartly, reinvesting aggressively to capture long-term market share while expanding into higher-margin fintech services.
For patient value investors willing to look past near-term margin noise and competitive headlines, MercadoLibre represents a rare opportunity. The Latin American growth story is far from over, and the stock’s lowest-ever valuation offers a compelling entry point for those who believe execution, not headlines, ultimately drives returns.
In a market obsessed with short-term optics, MercadoLibre’s blend of 50% annual revenue growth and rock-bottom pricing may prove impossible to ignore over the next decade.
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