JPMorgan has reaffirmed its Neutral rating on MercadoLibre, Inc. (NASDAQ:MELI), despite highlighting a more optimistic outlook following indications of reduced competition from Shopee. As reported on February 4, 2026, the investment bank’s stance comes in light of Shopee’s recent decision to set take rates comparable to those of MercadoLibre, which may lessen competitive pressures in the region.
In the third quarter, MercadoLibre reported a net income of $421 million, marking a 6% increase from the previous year. However, this figure fell short of analysts’ expectations, which projected earnings of $481 million. The shortfall was attributed to currency fluctuations and a noted decline in consumer demand in Argentina.
Financial Performance and Market Dynamics
Despite the challenges, MercadoLibre’s growth metrics showed positive trends. The company achieved a 35% increase in gross merchandise volume (GMV) on a currency-neutral basis, leading to a 39% rise in net sales, reaching $7.4 billion. These results exceeded market projections and highlighted the company’s resilience in the face of economic headwinds.
In Brazil, enhancements such as free shipping contributed significantly to customer growth, boosting GMV by 34%. However, this initiative also resulted in a decline in earnings before interest and taxes (EBIT) margins, which fell to 9.8%.
Additionally, Mercado Pago, the company’s financial services arm, reported a remarkable 83% increase in loan balances, totaling $11 billion. The delinquency rate also improved, decreasing to 6.8%. Nevertheless, the overall EBIT of $724 million was below expectations, further complicating the financial picture for the firm.
Investment Outlook and Considerations
MercadoLibre operates an online commerce platform that specializes in e-commerce and related services across four geographical segments: Brazil, Argentina, Mexico, and Other Countries. While the potential for growth remains evident, analysts at JPMorgan express caution, suggesting that there may be more lucrative opportunities in the AI sector that could yield higher returns in a shorter timeframe.
The firm acknowledges the risks associated with investing in MercadoLibre, especially in a fluctuating economy. As the digital currency and payments landscape evolves, investors are advised to weigh their options carefully, particularly in light of emerging technologies that may offer substantial upside potential.
For additional insights into promising investments, including those in the AI sector, readers can explore reports detailing the best-performing stocks of 2025 and opportunities in the food sector for 2026.
This analysis was originally published by Insider Monkey.
