Key Points
- MELI shares declined 6.8% during trading and have retreated 37% from the 52-week peak of $2,614, now hovering near $1,649
- JPMorgan shifted MELI from Overweight to Neutral and reduced price target from $2,650 down to $2,100
- The bank projects MELI’s 2026 margins will fall approximately 1.8 percentage points, roughly 15% beneath market expectations
- Rivalry from Amazon and Sea Limited’s Shopee platform in Brazil creates ongoing margin challenges
- Despite 44% revenue expansion, MELI’s net income advanced only 5% in 2025, weighed down by increased loan loss reserves
MercadoLibre experienced another difficult trading session on Thursday. The Latin American e-commerce and fintech powerhouse shed 6.8% during afternoon hours, extending a decline that has erased nearly 37% of its value from the June 2025 high of $2,614. Trading around $1,649, the stock has left many investors nursing substantial losses since last summer.
Thursday’s selloff received contributions from broader market volatility. Heightened U.S.-Israeli military operations targeting Iran drove oil prices sharply higher, creating turbulence across global equity markets. Goldman Sachs placed recession odds at 25% over the coming twelve months. Major indices including the S&P 500, Dow, and Nasdaq each declined approximately 1% as capital flowed toward defensive positions.
MELI faces challenges extending well beyond geopolitical tensions and energy market dynamics.
JPMorgan Moves Rating to Neutral
On Thursday, JPMorgan shifted its stance on MercadoLibre to Neutral from Overweight while lowering the price target from $2,650 to $2,100. The firm pointed to persistent competitive dynamics in Brazil and emerging margin headwinds as primary factors driving the reassessment.
MELI’s chief financial officer recently signaled the company can operate with margins around 9% over the coming quarters. This statement raised concerns among Wall Street analysts. JPMorgan subsequently revised its 2026 margin forecast to 8.8% and currently anticipates earnings before interest and tax will arrive approximately 15% below Wall Street consensus for the year — with Q1 2026 potentially missing estimates by around 24%.
The investment bank also lowered its long-term margin projection to 14% from a previous 17%, reflecting uncertainty about the timeline for profitability recovery.
Sea Limited’s Shopee continues its aggressive stance in Brazil. The platform intends to redirect savings from adjusted take-rate structures into promotional discounts linked to Brazil’s Pix instant payment infrastructure, maintaining intense competitive dynamics.
Financial Performance Reveals Underlying Challenges
MELI’s full-year 2025 financial results presented contrasting signals. Revenue reached $29 billion, climbing 44% compared to the prior year — an impressive top-line expansion by any measure. Net income, however, advanced merely 5% to $2 billion.
The primary drag: provisions for doubtful accounts surged 66%, reflecting aggressive expansion of the company’s lending operations. Credit portfolio growth accelerated 90% during Q4 2025. Operating margin compressed to 11.1% from 12.7% recorded in 2024.
Management has responded by implementing tighter credit underwriting standards, establishing more conservative limits on loan sizes. The company now deploys artificial intelligence tools and enhanced customer analytics to identify higher-risk borrower profiles more effectively.
Within the e-commerce segment, Amazon maintains steady expansion across numerous Latin American territories, contributing additional competitive headwinds.
Regional Economic Developments Offer Mixed Signals
Certain macroeconomic indicators provide reasons for optimism. Argentina has witnessed poverty rates decline, though inflation remains elevated around 32%. Venezuela’s oil exports have climbed to their strongest levels since 2018 following recent political transitions — signaling economic improvement in an important regional market.
JPMorgan continues to forecast long-term earnings expansion at a compound annual growth rate near 32% spanning 2026 through 2029. The firm anticipates the market will remain hesitant to fully value this growth trajectory throughout 2026 given substantial near-term uncertainties.
MELI’s price-to-earnings multiple has contracted to approximately 44. Year-to-date, shares have fallen 16.5%.
