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Here are my thoughts on yesterday's earnings, completely human written and free from lazy LLM bullshit.
People like to categorize certain CEO's or management teams as "wartime" or "peacetime." More often than not, this is more of a superficial take on the boldness/brashness of their personalities, not anything of substance. What actually matters is their actions, which is most evident in the financials. While they don't make headline-grabbing statements like a Musk or a Karp, MELI's management over the previous year or two has decisively entered "wartime" mode.
You've probably seen several different posts on here already about yesterday's earnings print. The top line numbers/growth KPI's were astronomically good, but the bottom line numbers looked concerning. This leads into the two most prominent bear theses with MELI:
1) Shopee and Amazon are competing so fiercely that LATAM ecommerce is increasingly becoming a race to the bottom
2) MELI's explosive growth in their loan book is deteriorating in quality and could blow up in their faces during a credit cycle
These points have some legitimacy, although I believe that it's much harder to maintain a bear stance when their margin compression is taken in the context of the whole picture. These narratives are the main reason the stock is down over 30% from the highs, and this most recent earnings report was the most extreme case of management investing for growth in any quarter since COVID.
Top line revenue, TPV, GMV, unique buyers, Fintech MAU's, AUM, advertising, and the size of the loan book all grew at an absolutely ASTONISHING rate for a company of this size. To give you some context, MELI added more revenue in a single quarter than Shopify added in the entirety of 2025. I understand it's not a perfect comparison, but that should give you some idea of the sheer magnitude of that 49% growth when you're already at 30b dollars in revenue. Pretty much every KPI that deals with overall business expansion looked similarly astounding.
The profitability metrics are where investors got scared. Operating margins took a big plunge downward to 7%, and NIMAL contracted to around 17%. Even as a huge MELI bull, those numbers made me a little uneasy at first. As I mentioned above, management has fully embraced a wartime capital allocation strategy. They are pouring nearly every available dollar into attracting more users, as well as getting existing users to use their marketplace and Fintech offerings more frequently. Specifically, they are accelerating credit card portfolio expansion, which creates a huge accounting loss that they need to recognize immediately. They are also pouring money into their newer CBT and 1p businesses, which are seeing huge fixed costs and not at a scale where they are margin accretive. In order to fully explain everything that happened this quarter that affected profitability, this post would get extremely long. Please comment if you're curious about my thoughts or are confused about the financial jargon used on the earnings call to explain things.
To summarize my takeaway, the huge investment spending is probably both aggressive and defensive. Shopee is a real threat making real progress in Brazil, and Amazon needs no introduction. With that said, I believe the spending is much more aggressive than defensive.
A business that is backed into a corner and fighting to stay relevant isn't posting 50% top line growth. They aren't adding the entire population of Chile's worth of new users onto their Fintech platform. They aren't seeing a 17% reduction in unit shipping costs while handling 56% more volume. It is clear to me that MELI is willing to relentlessly fight for customers now, because the lifetime value of a customer is multiples higher on average than what they spend to get them.
Curious to hear your thoughts? As long as there is interest, I plan on continuing to write these long form pitches/updates every few weeks or so on a variety of promising businesses.