I have been a big fan of Mercado Libre for quite a while. For about 2 years I’ve been trying to add more of this to my portfolio unfortunately I only have a small stake, although from a very cheap entry point.
Now everyday feels like its becoming even more difficult to buy more. It is a gigantic business model literally trying to be the amazon + paypal + ebay of south america, and gaining strides every day. So from that point of view even at current price it still has huge upside.
What scares me is the “big boys” especially amazon started looking more seriously into SA, and before this covid madness was aggressively expanding in Brasil.
Also tomorrow right at market opening they have their earnings conference call and I am knee deep into Sept 18 long call options hoping covid shop from home culture will give another jump raise to their earnings and make a few quick bucks.
When this lockdown is over, I think their profits will drop naturally but for about 6-12 months people in SA got more into “buying stuff online” culture, so part of that might stick, and accelerate their growth.
Like you I have bought a couple of shares in Mercadolibre and seen it rise exponentially from my low buy level to the point of me thinking of selling them to lock in the gain. But as a “buy and hold” person I plan to hold them for the foreseeable future. Unless something drastic happens to the company.
I am not too bothered about the “big boys” muscling in as I think there is room for competitors. But also for this reason.
In the e-commerce space, similar to the physical commerce space, I am seeing a gradual fragmentation into distinct regional trading blocs.
What I mean is that in the beginning Amazon was the “only game in town” in term of breadth and ambition in regards to e-commerce. But gradually regional competitors have risen up copying Amazon’s business model and dominating their own region. By adapting to local cultural norms and markets giving them an advantage over Amazon.
So that we end up with the following companies being the market leaders in their respective regions:
North America - Amazon
UK/Europe - Amazon
Africa - Jumia
China - Alibaba
South America - Mercadolibre
South East Asia - Sea Limited
India - Flipkart
However running alongside this regionalisation is an undercurrent of “nationalism”. You may have heard phrases such as “America First”, “Buy British” by politicians and businesses wanting consumers to buy their own nation’s goods over “foreign” goods as a form of patriotism.
I can see this happening in the e-commerce space for example with South Americans purchasing from Mercadolibre over say Amazon as the former is perceived as a South American “Champion” while the latter is seem as an US “interloper”. Similarly the Chinese buying from Alibaba in preference to any other foreign competitor.
Hence I agree that short term the share price of Mercadolibre may dip after the earning conference call. But I would see that as a buying opportunity for the long term consistent with my “buy and hold” strategy. Plus as I said the South American market is big enough for other competitors.
Earnings report this morning smashed top and bottom lines and profit estimates. More than 100% growth YoY and the stock price is down 3.51% (I know, i know short term but still, this hurts a lot with my options)
Some random cruise company also posted earnings and as expected massive losses their shares are up 6%, what on actual F
If this is true then which e-commerce company do Eastern European people shop from? I notice from your profile that you are from Romania. So it would be interesting to gain some knowledge from you.
I remember reading that Russians prefer to shop with AliExpress.
For eastern Europe, it really depends on the category. Different shops for different categories.
The biggest online shop we have here is eMag.ro(they also try to win our Hungarians and Bulgarians neighbors hearts with eMag.hu and eMag.bg) but it’s not the biggest in all categories, mostly at electronics. They also try to copy Amazon’s strategies.
