Key Takeaways
- MercadoLibre stock fell 10% in a week, mostly on Monday, after Lula’s surprise win in Brazil’s runoff sank Brazilian stocks, Nu Holdings among them.
- The worry is currency risk: a weaker real shrinks what MercadoLibre’s Brazilian sales are worth in dollars.
- Citi upgraded the stock to Buy after the drop, though it trimmed its target.
- Third-quarter results on Nov. 4 will show whether operating margin has stopped shrinking.
MercadoLibre (MELI) stock is down 10% in the past week. Most of the drop came on Monday, the first trading day after President Luiz Inácio Lula da Silva won Brazil’s runoff. Nu Holdings (NU) fell 22% before the open that morning.
Nu had more riding on Brazil: almost 118 million of its 139 million customers are there. MercadoLibre is more spread out. Brazil was 52.6% of its 2025 revenue, Mexico 22.4% and Argentina 20.6%. Investors sold it like a Brazil stock anyway.
Investors Bet on the Wrong Candidate
Lula beat Flávio Bolsonaro 51.8% to 48.2% on Oct. 25, weeks after losing the first round. Investors had bet on a market-friendly Bolsonaro win.
Nothing in MercadoLibre’s business changed over the weekend. The worry is the real: a weaker one shrinks what its Brazilian sales are worth in dollars. Last quarter the real worked the other way, and Brazil’s revenue grew 59% in dollars against 42% FX-neutral.
Wall Street Bought the Dip
On Tuesday, Citi upgraded MercadoLibre to Buy from Neutral, calling the selloff an entry point, though it trimmed its target to $2,050 from $2,100.
Analysts expect normalized EPS to dip to $38.26 this year, then climb to $55.89 in 2027 and $78.56 in 2028:
The election reaches those figures mainly through the real: a weaker one trims them in dollars.
MercadoLibre’s Nov. 4 Report Is About Margins
MercadoLibre reports third-quarter results on Nov. 4. In the second quarter, revenue rose 50% to $10.2 billion, but operating margin fell to 6.7% from 12.2% a year earlier. The company spent on free shipping, credit and cheaper selling fees while Shopee pushed hard in Brazil.
The quarter ended Sept. 30, before the vote, so watch two things: whether the margin holds near 6.7%, and what management says about Brazil in the fourth quarter, the first with a weaker real.
TIKR Tracks 26 Analysts on MercadoLibre. How Many Say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on MercadoLibre, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See MercadoLibre’s Analyst Ratings
A Buy If Margins Hold
The stock traded at 40x forward earnings on Thursday. That’s far below its five-year average of 63x and not far above its March low of 30x:
Wall Street’s $2,272 consensus target is 40% above Friday’s close.
I’d be a buyer here if Nov. 4 shows the margin holding at 6.7% or better and management sounds steady on Brazil.
Of course, if the real keeps sliding, MercadoLibre’s dollar results will take a hit in the quarters ahead, whatever happens to margins.
So what is MercadoLibre stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
