Meet the Monster Stock that Continues to Crush the Market

The stock market hasn't exactly performed well recently. As I write this on April 22, the S&P 500 remains about 15% below its recent high, and the Nasdaq Composite index remains down 20%, in bear market territory.

However, not all stocks are in the same boat. In fact, MercadoLibre (NASDAQ: MELI) is up by nearly 25% this year, and is currently just below its all-time high.

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It's not hard to understand why MercadoLibre has held up well in the recent market downturn. The company doesn't sell anything in the United States, so it isn't vulnerable to tariff uncertainty. Plus, the U.S. dollar has weakened recently, creating favorable foreign exchange headwinds for MercadoLibre investors.

It isn't just the recent market downturn. As you can see from the chart below, MercadoLibre has crushed the market over pretty much any length of time:

Data source: YCharts. S&P 500 returns include reinvestment of dividends.

Excellent momentum

It's not hard to see why MercadoLibre has been such a great investment. It has grown from a small start-up about 20 years ago into the most valuable company in Latin America. Over the past 10 years, merchandise volume on the marketplace has grown by more than 500% and the number of unique buyers has roughly quadrupled. Acquiring total payment volume in the Mercado Pago business has grown to nearly 10 times its 2018 level.

It isn't just top-line growth. MercadoLibre's operating margin has steadily improved from negative 6.7% in 2019 to nearly 13% in 2024.

Recent results show that the company's momentum is still alive and well. In the fourth quarter of 2024, MercadoLibre's gross merchandise volume (GMV) and total payment volume (TPV) grew by 27% and 33% respectively, year over year. The relatively small, but rapidly growing credit portfolio grew by an impressive 74%, and has tons of potential to bring customers who are underserved by the traditional banking system into MercadoLibre's ecosystem.

Still a massive opportunity

MercadoLibre is one of the largest stock positions in my portfolio and has been an excellent performer for me (I've owned it for about five years). But I don't think it's done yet. In fact, I've added shares to my investment in 2025, despite the stock being near its all-time high.

In MercadoLibre's key markets, e-commerce, logistics, cashless payments, consumer credit, and other modern commerce-related tools are in the relatively early stages of adoption compared with the United States. For example, e-commerce penetration in the United States has reached nearly one-fourth of all retail sales. In Latin America, it's just 13%.

There are some particularly interesting growth levers, such as the company's credit card product, which is growing rapidly and creates tremendous cross-selling potential. The recently revamped MELI+ subscription product, which is similar in nature to Amazon's Prime subscription model, is still in the very early stages as well.

Digital advertising is another big opportunity. MercadoLibre's ad revenue has increased more than tenfold since 2019, but the company still only has a 5% market share.

What's more, the markets where MercadoLibre operates have more than 500 million people (there are 100 million unique buyers in MercadoLibre's ecosystem) and a combined $5 trillion GDP, and the financial services industry in its main markets (especially Brazil) have historically been controlled by just a handful of large financial institutions.

In short, this business could conceivably double, triple, or more in size within the next decade, and if it does, the stock could continue to outperform the S&P 500 by a wide margin.

Should you invest $1,000 in MercadoLibre right now?

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Matt Frankel has positions in Amazon and MercadoLibre. The Motley Fool has positions in and recommends Amazon and MercadoLibre. The Motley Fool has a disclosure policy.