MercadoLibre Hits New Heights

Here's our initial take on MercadoLibre's (NASDAQ: MELI) fourth-quarter financial report.

Key Metrics

MercadoLibre Keeps Climbing

Investors couldn't have been happier with the results that MercadoLibre posted to finish 2024. Overall gains in revenue and profit in the fourth quarter were quite a bit better than expected, particularly with earnings coming close to quadrupling from year-ago levels. MercadoLibre got big contributions from all sides of its business, with commerce-related revenue climbing 44% year over year despite a strong U.S. dollar weighing on dollar-denominated financial measures. Fintech revenue was up 29%. General improvement in margins across the board helped to bolster MercadoLibre's financial success as well.

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MercadoLibre's other business metrics showed similarly encouraging gains. The company now has 67.3 million unique active buyers, up 24% from 12 months ago, with a sizable jump in gross merchandise volume and a 27% rise in items sold on the MercadoLibre marketplace. Same-day and next-day shipments via Mercado Envios were up 21%. Big gains in the company's credit card business helped send assets under management above the $10 billion mark for the first time, rising by more than $2.6 billion in just three months.

MercadoLibre's shareholder letter was highly optimistic, with the company expecting to build on its past efforts and drive further momentum into 2025 and beyond. In the view of its leaders, the best is yet to come for MercadoLibre.

Immediate Market Reaction

Investors certainly got a pleasant surprise from the unexpectedly strong results, and the stock immediately reflected their good fortune. Shares moved higher by more than 13% in the first 30 minutes of trading in the after-hours session late Thursday. The gains will be more than enough to send the stock to all-time highs if they hold in the regular session on Friday.

What to Watch

Everything seems to be going MercadoLibre's way right now. Engagement on its marketplace is at record levels, as are measures of payment activity on the Mercado Pago network. The company is doing a great job of taking ideas from competitors to the north and applying them to its own market, including the MELI+ loyalty program and the key addition of an in-network credit card.

As geopolitical conditions evolve, MercadoLibre's command of the Latin American region will become increasingly difficult for would-be competitors to challenge. That spells good news for the company, and shareholders who've stuck with the company through tougher times are earning their rewards.

Helpful Resources

• Shareholder letter and financial presentation [links download PDFs]
• Investor relations page

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends MercadoLibre. The Motley Fool has a disclosure policy.