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MELI vs. SE: Which Global E-Commerce Offers Greater Upside Now?
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Key Takeaways
MELI's Q2 margin contracted 210 bps amid FX losses, shipping subsidies and higher marketing costs.
SE's Shopee grew GMV 25% in H1 and reached order volume leadership in Brazil while staying profitable.
MELI's fintech loan surge came with asset quality decline, unlike SE's stable NPLs amid 90%+ loan growth.
MercadoLibre (MELI - Free Report) and Sea Limited (SE - Free Report) are two of the most prominent e-commerce platforms serving high-growth emerging markets, with MELI dominating Latin America and SE leading Southeast Asia. Both companies have evolved beyond traditional marketplaces to offer integrated ecosystems combining e-commerce, fintech services and digital solutions for millions of users across their regions.
As investors increasingly look toward emerging markets for growth opportunities, MELI and SE represent compelling options with distinct regional advantages and business models. Both companies recently reported their second-quarter 2025 results, revealing divergent performance trends and competitive positioning that create important differences for investors to consider. Let's delve deep to determine which one is a better investment now.
The Case of MELI
MercadoLibre faces concerning trends that may limit future upside potential. Competitive pressures appear to be intensifying across its core markets as new entrants like TikTok Shop and Shopee gain traction in Brazil, while established players like Amazon invest more heavily in Latin America. The company's response of lowering the free shipping threshold, reducing seller fees and increasing marketing spend during the recently concluded quarter demonstrates the intensity of this competition and suggests sustained pressure on profitability ahead.
Mercado Pago, the company's fintech division, faces mounting challenges that threaten its sustainability. While credit portfolio growth reached 91% year over year in the second quarter, this expansion comes at the cost of deteriorating asset quality and heightened regulatory scrutiny. Pago’s aggressive lending practices expose the company to significant credit losses across volatile Latin American economies. Rising provisions for doubtful accounts and multi-currency exposure create substantial headwinds for future profitability.
Currency fluctuations continue to impact momentum, with FX losses doubling year over year to $117 million in the second quarter. At the same time, logistics expansion and regulatory changes across fintech markets are likely to constrain cash flow generation. Operating margin contracted 210 basis points year over year in the recently concluded quarter, reflecting the challenge of balancing growth initiatives with profitability.
The Case of SE
Sea Limited operates a diversified business model with synchronized growth across e-commerce, fintech and digital entertainment. Garena, anchored by Free Fire, continues to demonstrate resilience, with bookings up 23% year over year in the recently reported quarter and full-year guidance for the unit raised to over 30% growth. This stability provides predictable cash flows that support investments across other segments.
The e-commerce segment, Shopee, remains a key growth driver, with gross merchandise value advancing 25% in the first half of 2025 and momentum expected to carry into the third quarter. In Brazil, Shopee has achieved market leadership by order volume while maintaining profitability, a performance that contrasts with MELI’s margin pressures in the same market and suggests superior operational efficiency.
The fintech division, Monee, offers meaningful upside potential. The loan portfolio expanded more than 90% year over year in the second quarter, while the non-performing loan ratio remained stable at 1%. This balance of rapid expansion and disciplined credit management highlights strong execution. Diversification across Southeast Asia reduces reliance on any single economy, unlike MELI’s heavier concentration in Brazil and Argentina.
Sea’s integrated ecosystem creates cross-selling opportunities and enhances user stickiness. AI initiatives in logistics, advertising and digital content strengthen competitiveness, while full-year guidance for Garena signals sustained visibility into gaming revenues. Importantly, Sea is generating positive cash flows while investing for growth, reflecting disciplined capital allocation. With Shopee’s rising advertising contribution, Monee’s early-stage penetration, and Garena’s expanding global reach, Sea has multiple avenues to drive continued growth.
Price Performance and Valuation of MELI and SE
In the year-to-date period, SE shares have rallied 72.4%, while MELI shares have increased 41.9%.
SE’s sharp rally reflects investor optimism around its consistent execution, profitable operations in Brazil and rising contribution from fintech and gaming. By contrast, MELI’s smaller advance signals caution over intensifying competition, heavier promotional spending and credit risk in volatile markets.
MELI and SE Stock Performance
Image Source: Zacks Investment Research
Valuation-wise, MELI and SE’s shares are currently overvalued, as suggested by a Value Score of D and F, respectively.
Sea has a forward 12-month price-to-sales multiple of 4.12X, supported by its diversified footprint and balanced earnings mix. MercadoLibre also remains expensive at 3.75X, given its exposure to competitive pressures, credit quality concerns and margin headwinds.
Price/Sales (F12M)
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for MELI & SE?
The Zacks Consensus Estimate for MELI’s third-quarter 2025 earnings is pegged at $9.88 per share, which has been revised downward by 16.6% over the past 30 days. The figure indicates a 26.18% increase year over year.
The Zacks Consensus Estimate for SE’s third-quarter 2025 earnings is pegged at $1.11 per share, which has been revised upward by 5.71% over the past 30 days. The figure indicates a significant improvement from last year’s reported earnings of 54 cents per share.
Sea stands out with diversified revenue streams, disciplined capital allocation and steady cash generation. Its stronger share price performance reflects confidence in this model, and the valuation premium is underpinned by upward earnings estimate revisions. MercadoLibre, on the other hand, continues to grapple with competitive intensity, margin pressure and credit risk, with downward estimate revisions reinforcing investor caution. Considering these factors, Sea’s Zacks Rank #3 (Hold) positions it more favorably than MercadoLibre’s Zacks Rank #4 (Sell).
Image: Bigstock
MELI vs. SE: Which Global E-Commerce Offers Greater Upside Now?
Key Takeaways
MercadoLibre (MELI - Free Report) and Sea Limited (SE - Free Report) are two of the most prominent e-commerce platforms serving high-growth emerging markets, with MELI dominating Latin America and SE leading Southeast Asia. Both companies have evolved beyond traditional marketplaces to offer integrated ecosystems combining e-commerce, fintech services and digital solutions for millions of users across their regions.
As investors increasingly look toward emerging markets for growth opportunities, MELI and SE represent compelling options with distinct regional advantages and business models. Both companies recently reported their second-quarter 2025 results, revealing divergent performance trends and competitive positioning that create important differences for investors to consider. Let's delve deep to determine which one is a better investment now.
The Case of MELI
MercadoLibre faces concerning trends that may limit future upside potential. Competitive pressures appear to be intensifying across its core markets as new entrants like TikTok Shop and Shopee gain traction in Brazil, while established players like Amazon invest more heavily in Latin America. The company's response of lowering the free shipping threshold, reducing seller fees and increasing marketing spend during the recently concluded quarter demonstrates the intensity of this competition and suggests sustained pressure on profitability ahead.
Mercado Pago, the company's fintech division, faces mounting challenges that threaten its sustainability. While credit portfolio growth reached 91% year over year in the second quarter, this expansion comes at the cost of deteriorating asset quality and heightened regulatory scrutiny. Pago’s aggressive lending practices expose the company to significant credit losses across volatile Latin American economies. Rising provisions for doubtful accounts and multi-currency exposure create substantial headwinds for future profitability.
Currency fluctuations continue to impact momentum, with FX losses doubling year over year to $117 million in the second quarter. At the same time, logistics expansion and regulatory changes across fintech markets are likely to constrain cash flow generation. Operating margin contracted 210 basis points year over year in the recently concluded quarter, reflecting the challenge of balancing growth initiatives with profitability.
The Case of SE
Sea Limited operates a diversified business model with synchronized growth across e-commerce, fintech and digital entertainment. Garena, anchored by Free Fire, continues to demonstrate resilience, with bookings up 23% year over year in the recently reported quarter and full-year guidance for the unit raised to over 30% growth. This stability provides predictable cash flows that support investments across other segments.
The e-commerce segment, Shopee, remains a key growth driver, with gross merchandise value advancing 25% in the first half of 2025 and momentum expected to carry into the third quarter. In Brazil, Shopee has achieved market leadership by order volume while maintaining profitability, a performance that contrasts with MELI’s margin pressures in the same market and suggests superior operational efficiency.
The fintech division, Monee, offers meaningful upside potential. The loan portfolio expanded more than 90% year over year in the second quarter, while the non-performing loan ratio remained stable at 1%. This balance of rapid expansion and disciplined credit management highlights strong execution. Diversification across Southeast Asia reduces reliance on any single economy, unlike MELI’s heavier concentration in Brazil and Argentina.
Sea’s integrated ecosystem creates cross-selling opportunities and enhances user stickiness. AI initiatives in logistics, advertising and digital content strengthen competitiveness, while full-year guidance for Garena signals sustained visibility into gaming revenues. Importantly, Sea is generating positive cash flows while investing for growth, reflecting disciplined capital allocation. With Shopee’s rising advertising contribution, Monee’s early-stage penetration, and Garena’s expanding global reach, Sea has multiple avenues to drive continued growth.
Price Performance and Valuation of MELI and SE
In the year-to-date period, SE shares have rallied 72.4%, while MELI shares have increased 41.9%.
SE’s sharp rally reflects investor optimism around its consistent execution, profitable operations in Brazil and rising contribution from fintech and gaming. By contrast, MELI’s smaller advance signals caution over intensifying competition, heavier promotional spending and credit risk in volatile markets.
MELI and SE Stock Performance
Image Source: Zacks Investment Research
Valuation-wise, MELI and SE’s shares are currently overvalued, as suggested by a Value Score of D and F, respectively.
Sea has a forward 12-month price-to-sales multiple of 4.12X, supported by its diversified footprint and balanced earnings mix. MercadoLibre also remains expensive at 3.75X, given its exposure to competitive pressures, credit quality concerns and margin headwinds.
Price/Sales (F12M)
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for MELI & SE?
The Zacks Consensus Estimate for MELI’s third-quarter 2025 earnings is pegged at $9.88 per share, which has been revised downward by 16.6% over the past 30 days. The figure indicates a 26.18% increase year over year.
MercadoLibre, Inc. Price and Consensus
MercadoLibre, Inc. price-consensus-chart | MercadoLibre, Inc. Quote
The Zacks Consensus Estimate for SE’s third-quarter 2025 earnings is pegged at $1.11 per share, which has been revised upward by 5.71% over the past 30 days. The figure indicates a significant improvement from last year’s reported earnings of 54 cents per share.
Sea Limited Sponsored ADR Price and Consensus
Sea Limited Sponsored ADR price-consensus-chart | Sea Limited Sponsored ADR Quote
Conclusion
Sea stands out with diversified revenue streams, disciplined capital allocation and steady cash generation. Its stronger share price performance reflects confidence in this model, and the valuation premium is underpinned by upward earnings estimate revisions. MercadoLibre, on the other hand, continues to grapple with competitive intensity, margin pressure and credit risk, with downward estimate revisions reinforcing investor caution. Considering these factors, Sea’s Zacks Rank #3 (Hold) positions it more favorably than MercadoLibre’s Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.