MercadoLibre (MELI) stock tumbled late Wednesday after the Latin American e-commerce company reported third quarter earnings that were below expectations, despite sales that beat consensus.
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MercadoLibre said that it earned an adjusted $7.83 per share on sales of $5.31 billion for the September-ended quarter. Analysts polled by FactSet projected the Uruguay-based company would post adjusted earnings of $10 per share on sales of $5.28 billion.
For the same period a year earlier, MercadoLibre posted adjusted earnings of $7.16 per share on sales of $3.76 billion.
MercadoLibre: Earnings Miss
The e-commerce firm said in a shareholder letter that investments in its shipping operations and credit card originations bit into its profit for the quarter.
“The market did underestimate the amount of investments we are doing in credit card,” Chief Financial Officer Martin de los Santos told Reuters.
Often called the Amazon.com (AMZN) of Latin America, MercadoLibre operates an e-commerce platform across 18 countries. Its largest markets are Brazil, Mexico and Argentina, where it was founded. It also offers Mercado Pago, a fintech business that includes a Venmo-like digital wallet popular in the region.
The total volume of payments handled by MercadoLibre’s fintech arm climbed 34% to $50.7 billion for the September quarter. The gross merchandise volume sold through its e-commerce marketplace climbed 14% year over year to $12.9 billion.
“Our competitive position is strengthening as retention improves across our businesses,” the shareholder letter said. “This gives us great confidence as we invest to fully capitalize on the many growth opportunities that are ahead of us, knowing that our ecosystem is uniquely placed to capture those opportunities.”
MercadoLibre Stock: Technical Ratings
Prior to earnings, MercadoLibre gained 1.3% in Wednesday trading. Shares have gained 34% year to date.
MercadoLibre stock is trading below a 2,161.73 flat base buy point, according to MarketSurge.
Coming into the report, MercadoLibre stock had an IBD Composite Rating of 98 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
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