It has been about a month since the last earnings report for MercadoLibre (
MELI Quick Quote MELI - Free Report) . Shares have lost about 8.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MercadoLibre due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
MercadoLibre Reports Loss in Q1
MercadoLibre reported a first-quarter 2021 loss of 68 cents per share, which lagged the Zacks Consensus Estimate for earnings of 27 cents per share. Notably, the company reported a loss of 44 cents per share in the year-ago quarter.
Its revenues surged 111.4% on a year-over-year basis (158.4% on an FX-neutral basis) to $1.38 billion. Further, the top line surpassed the Zacks Consensus Estimate of $1.19 billion. Revenues were driven by accelerating commerce and fintech revenues, which grew 139.2% and 72.4% year over year to $910.6 million and $467.8 million, respectively. Further, the e-commerce boom continued to act as a major tailwind. Further, increasing total payments volume (TPV), courtesy of a robust Mercado Pago and the mobile-point-of-sale (MPOS) business,contributed well. Moreover, a solid momentum across Mobile Wallet benefited the results. Moreover, the company’s rising gross merchandise volume (GMV), led by an accelerating mobile GMV, contributed 72.9% to the total GMV. Also, mobile GMV soared 215.7% year over year. Also, strong shipment growth via MercadoEnvios in the reported quarter was another positive. The growing penetration of managed networks was also a tailwind. Additionally, strengthening momentum acrossMercado Fondo and Mercado Credito benefited the company. Quarter in Detail
Brazil: Net revenues in the firstquarter were $768.7 million (55.8% of total revenues), up 93% year over year.
Argentina:The market generated revenues of $297.2 million (21.6% of the top line), which soared 124% year over year. Mexico: Net revenues in the reported quarter were $230.5 million (16.7% of revenues), up 143% year over year. Other countries:The markets generated revenues of $81.9 million (5.9% of total revenues), climbing 203.5% on a year-over-year basis. Key Metrics
GMV of $6.1 billion jumped 77.4% year over year and 114.3% on a reported basis and a FX-neutral basis, respectively.
The number of successful items sold was 222million, up 110% year over year. Moreover, the number of successful items shipped surged 130.7% year over year to 208.1 million. This can be attributed to the sturdy performance of MercadoEnvios. TPV was up 81.8% on a year-over-year basis to $14.7 billion, driven by a strong performance of MercadoPago. Further, off-platform payment volume (online-to-offline) was $8.5 billion, up 82.5% from the year-ago quarter. Additionally, the MPOS business witnessed year-over-year TPV growth of 90.2%.Further, the rapid adoption of MercadoLibre’s Mobile Wallet generated $2.9billion in transactions, up 192% year over year. TPV on marketplace was $5.8 billion, up 82.3% year over year. Further, total payment transactions skyrocketed 116.7% year over year to 630.1 million. Unique active userstotaled69.8 million, up 61.6% year over year. Operating Details
For the first quarter, the gross margin was 42.9%, contracting 510 basis points year over year.
Operating expenses were $500.5 million, which increased 46% year over year. However, as a percentage of revenues, the figure contracted to 36.3% from 52.5% in the year-ago quarter. The company reported $90.8 million of income from operations in the first quarter against the year-ago quarter’s loss of $29.7 million. Balance Sheet
As of Mar 31, 2021, cash and cash equivalents were $862.7 million, down from $1.9 billion as of Dec 31, 2020.
Short-term investments were $980.1 million in the first quarter, down from $1.2 billion in the previous quarter. Accounts receivable amounted to $64.8 million, up from $49.7 million in the fourth quarter of 2020. Further, the inventory level at the end of the first quarter was $131.5 million, up from $118.1 million at the end of the prior quarter. How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -145.35% due to these changes.
Currently, MercadoLibre has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise MercadoLibre has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.