Hey there, bargain hunter. Here’s the setup: a company growing revenue nearly 50% year-over-year, processing $87 billion in payment volume in a single quarter, and expanding across two of the fastest-growing consumer economies on earth – and it’s sitting roughly 38% below where it was trading not long ago. That company is MercadoLibre (MELI). The disconnect is worth your time.
What the Numbers Actually Say
The Q1 2026 print was not quiet. Net revenues came in at $8.85 billion, up 49% year-over-year and the fastest growth rate in nearly four years. Brazil revenue surged 55%. Mexico jumped 62%. Total Payment Volume hit $87.2 billion, up 50% year-over-year on an FX-neutral basis. Gross Merchandise Volume reached $19 billion, up 42%. Unique active buyers grew from 67 million to 84 million. Fintech monthly active users hit 83 million, up from 64 million a year ago.
Those are not the numbers of a business running out of runway.
So Why Is the Stock Down?
Margins. Management made a deliberate decision to spend – hard – on logistics infrastructure, free shipping expansion, and the credit card business. Operating margin came in at 6.9%, down from Q4 2025’s 10.1%. Net income was $417 million on $8.85 billion in revenue, a 4.7% margin that disappointed consensus. A large shareholder exit after earnings didn’t help the tape.
Slight tangent, but it matters: this is the same pattern Amazon ran for years. Crush margins, dominate logistics, then harvest. Whether MELI executes that playbook as cleanly is the real question.
The Valuation Gap
At a last close of roughly $1,586, one widely followed model puts MELI’s narrative fair value at approximately $2,440 – a gap of over 35%. The analyst consensus price target sits closer to $2,640 per share. The stock trades about 30% below consensus price targets and at an estimated 34% discount to intrinsic value estimates. Revenue is forecast to grow 19% annually over the next three years, compared to an 11% forecast for the broader multiline retail industry.
- Q1 2026 revenue: $8.85B (+49% YoY)
- Total Payment Volume: $87.2B (+50% YoY)
- GMV: $19B (+42% YoY)
- Operating margin: 6.9% (down from 10.1% in Q4 2025)
- Consensus price target: ~$2,640 vs. current ~$1,586
- 3-year EPS growth: +35% annually; 3-year stock return: +8% annually
What Could Go Wrong
Brazil is the key market and also the key risk. Competitive pressure on take rates, credit losses inside Mercado Crédito, and FX volatility across Argentina and Mexico all have teeth. The margin compression story could last longer than bulls expect if management keeps leaning into spend. And a large, single-market execution miss – particularly in Brazil – would reset the entire narrative fast.
What I’m watching: the credit portfolio. MercadoPago’s lending book is expanding quickly. If non-performing loans tick up materially in Q2 or Q3, that’s the signal the market’s concern about margins is structural, not temporary. If asset quality holds and margins recover even slightly by Q3, the setup becomes compelling again.
MELI has spent three years delivering 35% annual EPS growth while the stock went almost nowhere. That kind of divergence tends not to last forever. Worth a closer look before the market remembers it.