Late last year, we made the case for MercadoLibre (NASDAQ: MELI | MELI Price Prediction) to reach $3,000 per share in 2026. The stock was trading near $2,015 back then. However, despite a 9.7% pop in the past month, it currently trades at $1,831.93. The analyst consensus price target sits at $2,490.27, which implies nearly 36% more upside from current levels. That gap warrants examination.
MercadoLibre operates Latin America’s dominant e-commerce and fintech ecosystem across Brazil, Mexico, Argentina, and beyond through its Mercado Libre marketplace, Mercado Pago payments platform, and advertising business. The stock has slid 9.1% year to date, and it’s time to assess that thesis against reality.
Three Straight EPS Misses Compressed the Valuation
The selloff stems from earnings disappointments on the bottom line. MercadoLibre missed EPS estimates in Q2 2025 by 13.26%, Q3 2025 by 10.51%, and Q4 2025 by 6.92%. Most recently, revenue came in at $8.76 billion, beating the $8.49 billion consensus by 3.2%, yet EPS of $11.03 missed the $11.85 estimate. Net income fell 13% year over year even as revenue surged 44.6%.
Management attributed the decline to deliberate investments that compressed margins by an estimated 5 to 6 percentage points of operating margin in Q4 alone, driven by lowering Brazil’s free shipping threshold, scaling cross-border trade, expanding first-party operations, and growing the credit card business. Add $337 million in full-year foreign currency losses and tax rate normalization, and profit deterioration outpaces revenue growth. The market’s frustration is justified, even if the damage is self-inflicted by design.
Analysts Are Holding the Line, and a Few Are Getting More Aggressive
Wall Street is not flinching. Of 26 analysts covering the stock, 25 rate it Buy or Strong Buy and one rates it at Hold. The bull case rests on margin compression being temporary while the underlying growth engine remains exceptional. Full-year 2025 revenue grew 39.1% to $28.89 billion, operating cash flow surged 53% to $12.116 billion, and the credit portfolio expanded 90% year over year to $12.5 billion.
Jefferies upgraded the stock from Hold to Buy, calling the current valuation a “rare entry point” and citing historically low valuations despite reducing its price target from $2,800 to $2,600. Cantor Fitzgerald carries an Overweight rating with a $2,900 target, and Morgan Stanley maintains a Buy with a $2,600 target. The lone notable skeptic is J.P. Morgan, which downgraded the shares to Neutral. Analysts are watching the investment cycle mature, particularly the $10.9 billion Brazil capex plan for 2026, as the key test of whether margin recovery follows heavy spending.
A 35% Gap While the S&P 500 Holds Flat
As mentioned, MercadoLibre is down 9.1% year to date, while the S&P 500, as measured by SPY, is up 0.6% over the same period. That represents meaningful underperformance in a market that has barely moved. The stock’s 52-week range runs from $1,593.21 to $2,645.22, placing the current price closer to the floor than the ceiling. The 200-day moving average is $2,141.17, well above current levels. The consensus target of $2,490.27 reflects analyst conviction, not a guarantee, while our base target of $2,097.44 is considerably more conservative. The forward P/E of 38x suggests the market is pricing in some recovery but not the full bull case.
The $3,000 Target Belongs in 2027 Now
The bull case holds if the investment cycle peaks in 2026 and operating leverage shows through by year-end. The structural case remains intact: e-commerce penetration in Latin America remains roughly half that of mature markets, physical stores still represent about 85% of retail spending in the region, and MercadoLibre holds less than 5% of the region’s total retail market. Advertising revenue growing 67% FX-neutral and AI tools handling over 9 million customer conversations in Q4 with nearly 90% resolved without human intervention are genuine competitive advantages compounding quietly.
The bear case strengthens if management signals another year of aggressive margin sacrifice without a clear inflection point. Three consecutive EPS misses have eroded credibility on the earnings line, and the $337 million in currency losses are a structural drag that does not disappear with better execution. The $3,000 target was always a stretch for 2026. Given current levels and the investment cycle still running hot, that milestone realistically belongs in 2027 at the earliest. The structural growth case remains intact, but the timeline for recovery remains uncertain.
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