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MercadoLibre Is Down 29% From Its High.

On May 7, MercadoLibre reported its fastest revenue growth since Q2 2022. The stock fell 12.7% the next day.

That’s the market for you. And it may also be the opportunity.

MELI now sits roughly 29% below its 52-week high of $2,548.50. At around $1,808, the stock is trading below where most institutional models had it valued before the selloff even started. Meanwhile, the business – the actual operating business – is doing something most companies would celebrate.

What the Numbers Actually Say

Q1 2026 net revenues and financial income came in at $8.85 billion, up 49% year-over-year. Total Payment Volume reached $87.2 billion, up 50% year-over-year. Gross Merchandise Volume hit $19.0 billion, up 42%.

Those are not the numbers of a company in distress.

So why did the stock drop? Operating margin came in at 6.9%, down 600 basis points from Q1 2025’s 12.9%. EPS of $8.23 missed consensus estimates, and that’s what moved the stock sharply lower – despite the revenue beat.

The part of the story that matters more: management did not accidentally compress margins. They did it on purpose. MercadoLibre is in the middle of a deliberate investment cycle – building out 14 new fulfillment distribution centers across Brazil in 2026 alone, a roughly 50% increase in that footprint. The company also acquired logistics assets from Brazilian delivery company Loggi in the states of Sao Paulo and Rio de Janeiro in April. And it issued 2.7 million credit cards in the quarter, with the credit portfolio growing 87% year-over-year to $14.6 billion – the largest quarterly increase in nominal terms the company has ever recorded.

When a fintech scales its credit book this fast, accounting rules force it to book loan-loss provisions upfront against loans that haven’t yet seasoned. Reported profit takes the hit today. Interest income arrives over the life of the loan. The market is reading one line on the income statement and calling it a broken business. It may not be.

The Bigger Picture in Latin America

What’s interesting is just how early this story still is. MercadoLibre had 84.1 million unique active buyers and 82.9 million fintech monthly active users as of Q1 2026. Assets under management grew 77% year-over-year to nearly $20 billion. The region’s digital financial infrastructure is still being built in real time.

Slight tangent, but it matters: Brazil alone is where the real bet is being placed. Unique buyer growth in Brazil accelerated 32% year-over-year in Q1 – the fastest pace in five years. Items sold grew 56% in the country. Unit shipping costs fell 17% year-over-year in local currency. That combination – more volume, falling unit costs – is the operating leverage story the bears keep skipping over.

The company has also been investing heavily in AI-powered product discovery and advertising, which are already delivering higher conversion rates across its commerce platform.

Where the Disagreement Lives

Jefferies upgraded MELI to Buy on April 6, cutting its target from $2,800 to $2,600, and argued that margin compression has pushed the valuation down while the investment is clearly accelerating revenue. UBS has a Neutral rating with a $1,750 target – one of the more cautious views on the Street – reflecting concern that the monetization path is less clear after the earnings miss.

Both sides are looking at the same data. The disagreement is entirely about timing.

Q2 2026 earnings are confirmed for August 5 after market close. That report will likely settle a significant portion of this debate. Watch two numbers: Brazil items-sold growth – above 45% would confirm the free-shipping flywheel is still accelerating – and whether operating margin shows any sequential stabilization. If growth holds and margin improves even slightly, the bear case loses its core argument.

As of early July, the average 12-month analyst price target across 24 analysts sits around $2,209, implying roughly 18% upside from current levels. That’s not a consensus screaming buy – but it’s also not a consensus that believes the stock belongs here.

That math is worth sitting with.