u/Excellent-Sky-7202 ·
Reddit — r/ValueInvesting
· June 15, 2026 at 22:56
· ⬆ 15 pts
· 💬 23 comments
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Summary
The author questions MercadoLibre’s high forward P/E of 40 despite margin compression (13% → 6.9% YoY), currency/competition/credit risks, and a flat stock price over 5 years with 46% revenue CAGR.
The thesis is that the growth is real but the multiple seems unjustified given deteriorating profitability and external headwinds.
Quality assessment: Reasonable but incomplete DD; the author raises valid concerns but lacks depth on competitive moats or long-term margin recovery drivers.
Score15
Comments23
Upvote %94%
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Just wondering what are everyone’s thoughts on this stock and the price that it is trading at. I understand that the growth rates are very high (49% year over year), but the margins have also compressed significantly (from 13% to 6.9% year over year). So essentially, they brought in much more revenue but took home less money. I am just wondering why is there so much hype around this stock that is trading at a forward PE of 40? I thought international stocks were supposed to trade at lower multiples. I understand that the company is investing a lot of money back into the business, but there are also currency risks, competition risks (Amazon, SEA limited) and credit risks (being a fintech and taking subprime loans). I was looking into possible stocks to add to my portfolio and this one fits the bill because I have no international exposure, but just wanted to understand what makes this company so special and worth the high multiple. I also see the stock has been flat over the last 5 years while growing revenue about a 46% CAGR.
Revenue grew 49% YoY but operating margins halved from ~13% to 6.9%; forward P/E of 40 remains high for an international stock. Margin compression + flat 5-year price suggest the market is already pricing in perfection; any growth disappointment could lead to multiple contraction. High valuation with deteriorating unit economics makes the risk/reward unattractive relative to other value opportunities. If investment spending converts into sustained margin expansion, the stock could re-rate higher; Amazon/SEA competition may worsen.
This Reddit post, published June 15, 2026,
features u/Excellent-Sky-7202
discussing MELI.
1 trade idea extracted by AI with direction and confidence scoring.