MercadoLibre Cratered by 20% Last Year: Two Wall Street Pros Agree It’s Going to Rise 50% Soon

MercadoLibre (NASDAQ:MELI | MELI Price Prediction) currently trades at $1,668.72. The average Wall Street price target is $2,273.86, which implies about 36.3% upside to where analysts think it belongs.

MercadoLibre runs Latin America’s dominant online marketplace. It also owns Mercado Pago, a payments and credit arm, along with Mercado Ads, Mercado Envios logistics and the MELI+ membership across Brazil, Mexico and Argentina. Revenue is growing at its fastest pace in four years, and that is why Wall Street remains bullish.

A couple of analysts are even more bullish. Susquehanna and Barclays both have $2,500 targets, which works out to roughly 49.8% upside. With an implied move that close to 50%, the gap deserves a hard look.

Record Revenue Couldn’t Rescue a Shrinking Operating Margin

Profitability is what dropped the stock. In the second quarter, revenue rose 49.8% to $10.17 billion. Over the same stretch, operating margin contracted 550 bps to 6.7%, operating income fell 17% to $683 million and net income dropped 11% to $466 million. The first quarter looked much the same: operating income fell 20% and adjusted free cash flow came in at -$56 million. Before that, fourth-quarter EPS of $11.03 missed the $11.85 estimate.

Management says the squeeze is deliberate. The money is going into lower free-shipping thresholds, 2.6 million new credit cards in the quarter, PIX discounts in Brazil and AI tools. Other pressures are less voluntary: Mexico’s tax reform, weak consumer spending in Argentina, and net debt that climbed to $6.4 billion from $4.7 billion.

The stock is down 22.78% over the past year. Selling has picked up recently, with a 7.81% drop in the latest session.

Analysts Are Underwriting the Commerce and Fintech Flywheel

What drives the bullish thesis is “ecosystemic” users, meaning customers who use both the marketplace and Mercado Pago. That group grew 37%, and these users generate 70% more GMV and 90% more TPV. The credit portfolio hit $16.4 billion, up 75%, while 15- to 90-day NPLs held at 7.0%, close to historical lows. Advertising grew 73%.

The $2,500 calls lean on three factors: Mercado Pago’s scale, a logistics advantage that keeps Amazon (NASDAQ:AMZN) at bay, and fast-growing ad revenue that should lift margins (per the bull thesis). Timing matters here. Brazilian credit-card groups typically reach NIMAL breakeven after 12 to 18 months, so this year’s heavy issuance should begin to pay off over the next year or so. CEO Ariel Szarfsztejn has made it clear the spending isn’t hesitating: “We will not deploy new investments simply to manage comps.”

Ratings are still largely positive, but earnings estimates are sliding. Over the past 30 days, the 2026 EPS consensus saw 12 downward revisions against 2 upward ones, and it now stands at $38.2807. Ninety days ago it was $39.9564. Price targets are a forecast and come with no guarantee.

Sea Limited Sold Off Harder While Amazon Held Up

Some peers have been hit far harder than others by the selloff. Investors have sold off the emerging-market commerce names that are spending to grow, while the largest U.S. player has held its ground.

Sea Limited (NYSE:SE), whose Shopee competes with MercadoLibre in Brazil, is down 41.98% year to date. At $74 against a $153.79 target, analysts see about 107.8% upside. Sea has 5 Strong Buy, 22 Buy and 2 Hold ratings. Even so, second-quarter EPS of $0.70 missed the $0.8613 estimate. On paper, Sea’s upside is much larger.

Amazon is up 7.92% year to date at $249.09. Its $331.72 target implies about 33.2% upside, slightly below MercadoLibre’s. Of the 61 analysts covering it, 59 give it the equivalent of a Buy or better rating.

Sea offers the biggest implied upside in the group. MercadoLibre sits in the middle of the group on implied upside.

A 50-Times Earnings Stock Lagging the S&P 500

At $1,668.72, MercadoLibre has 36.3% implied upside to its $2,273.86 consensus target. Its 52-week range runs from $1,495 to $2,428. The stock trades at 50 times trailing earnings and 33 times forward earnings.

Shares are down 17.15% year to date, while the S&P 500 is up 12.24%. Over the past year, MercadoLibre has lost 22.78% and the index has gained 13.01%.

Here’s how the 26 analysts covering the stock break down:

• Strong Buy: 5
• Buy: 17
• Hold: 4
• Sell: 0

MercadoLibre’s Gap Looks Real, but Margins Need to Bottom First

The case for MercadoLibre works if the credit-card groups mature on schedule, NIMAL keeps rising from 21%, and ads plus cross-border trade lift operating margin back above the current 6.7%. In that scenario, the 2027 EPS consensus of $55.5430 makes today’s multiple look cheap, and $2,500 becomes reachable.

The case falls apart if spending never slows down. Rising net debt, Mexico’s tax pressures and steady downward estimate revisions would make the shares look cheap for a reason, with revenue growing while earnings stall.

My stance is bullish. Credit quality is holding up, and ecosystemic users are growing. Still, the stock needs at least one quarter of stable margins before the gap to the target starts to close.

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