One of My Largest Stock Positions Just Hit an All-Time High. Here's Why I'm Not Selling a Single Share.

MercadoLibre (NASDAQ: MELI), the Latin America-focused commerce company that offers an e-commerce marketplace, payment solutions, credit products, and more, recently skyrocketed to a fresh all-time high after reporting its latest results. Not only did it grow faster than investors had expected, but the numbers look strong throughout the business and investors seem relieved by the company's excellent profitability.

With that in mind, here's a rundown of the latest results from this incredible business, why investors' fears from the previous earnings report have been calmed, and why I'm not selling a share even though MercadoLibre is one of the largest investments in my stock portfolio.

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Excellent business momentum heading into 2025

MercadoLibre handily beat expectations on both the top and bottom lines. Earnings per share in particular came in well ahead of what analysts were looking for. And beyond the headline numbers, MercadoLibre's results look impressive throughout its business.

The fourth quarter is seasonally strongest for MercadoLibre (and most other companies that rely on consumer spending). But even compared with last year's fourth quarter, a 27% increase in items sold on the marketplace and a 33% increase in total payment volume through Mercado Pago show excellent momentum in the business. The company's young but fast-growing credit portfolio (credit cards, lending, etc.) grew by 74% year-over-year.

Plus, all of MercadoLibre's markets are performing well. The overall 27% increase in items sold on the marketplace comes from a double-digit growth rate in every single one of the company's core markets, including a 30% growth rate in the massive Brazil market. MercadoLibre's logistics platform is becoming far more efficient, which has helped increase engagement, with the average buyer shopping more than they did a year ago.

Profitability concerns have been calmed

When MercadoLibre issued its third-quarter earnings report a few months ago, the stock took a dive. The main reason for this was profitability concerns. Between capital that was reinvested in growth, as well as a somewhat alarming increase in "bad debt" losses, investors worried about the company's ability to grow on the bottom line.

Just to quickly recap, MercadoLibre's net margin fell to 7.5% in the third quarter from 9.1% a year prior. Its operating margin was under pressure as well, and the fact that the single largest contributing factor was a rise in bad debt due to the rapid growth of the credit portfolio frightened investors.

However, these fears have been calmed after the fourth-quarter results. Not only did the company's net margin jump to 10.5%, but operating margin rebounded sharply as well. MercadoLibre had its most profitable quarter ever. And while bad debt was still a factor, it had a lesser impact than in the third quarter -- despite the credit portfolio growing 10% sequentially and 74% year-over-year. Plus, the credit portfolio's net interest margin after losses increased 340 basis points compared to the third quarter and delinquency rates dropped significantly.

The future looks bright

As mentioned, MercadoLibre is one of the largest investments in my own stock portfolio, but I think it's still in the relatively early chapters of its growth story. E-commerce adoption is still in an earlier stage in some of MercadoLibre's largest markets, and the same is true of cashless payments. The MELI+ subscription product (similar to Amazon Prime) is still ramping up, and as more services -- such as the credit card product in Brazil and Mexico -- roll out, it creates opportunities for cross-selling and deeper relationships with customers. In MercadoLibre's least-stable core market, Argentina, macro trends are finally improving, and the company intends to ramp up its investment in growth.

There are other encouraging potential revenue drivers that are still young, including MercadoLibre's advertising business, which grew revenue by 41% year-over-year in the fourth quarter.

The bottom line is that MercadoLibre's ecosystem is still very much in growth mode. The markets where it operates have tremendous potential and I'm excited to watch the next few years of the company's evolution.

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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.