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MercadoLibre (MELI - Free Report) is positioning Gross Merchandise Volume as the primary lever for extending its growth trajectory across Latin America. The company's decision to lower Brazil's free shipping threshold from R$79 to R$19 represents a structural shift toward capturing everyday, lower-ticket purchases that represent a large pool of latent GMV in a region where e-commerce penetration remains in the mid-teens. This approach targets transaction frequency expansion rather than relying on episodic demand spikes or rising average order values.
Early indicators suggest this approach could support continued GMV expansion. The lower shipping threshold drove sold items growth to 42% year over year in Brazil during the third quarter of 2025, while new listings in the R$19-R$79 price band tripled year over year. The combination of increased purchase frequency and expanded assortment depth in price-sensitive categories indicates that both sides of the marketplace are responding to the structural incentive change. If buyer engagement and seller listings continue scaling together, GMV growth may become increasingly self-reinforcing.
Visibility into the near-term trajectory remains constructive. The Zacks Consensus Estimate for MercadoLibre’s fourth-quarter 2025 GMV is pegged at $19.04 billion, indicating 31% year over year growth and a sequential acceleration of 15% from the third-quarter level of $16.5 billion. Such an outlook implies rising transaction density into the peak seasonal period, supporting the view that GMV momentum could extend beyond a single quarter. The company's expanding logistics infrastructure and improving unit economics in fulfilment operations provide capacity headroom to absorb higher transaction volumes without proportional cost increases.
However, execution risks remain as MercadoLibre navigates the tension between GMV growth and profitability. Direct Contribution margins compressed in Brazil as free shipping subsidies outpaced immediate revenue gains, while intensifying competition may require sustained promotional investments. Whether the company can maintain elevated transaction intensity without incremental cost pressure will ultimately determine if GMV momentum can drive further stock upside.
MELI Faces Intensifying Competition
Competition in Latin American e-commerce remains intense, with Amazon (AMZN - Free Report) and Sea Limited (SE - Free Report) pursuing volume-led strategies in overlapping markets. Amazon continues to emphasize logistics investments and Prime-led fulfilment to encourage repeat purchasing, though its regional presence remains more selective than MercadoLibre’s. Sea Limited, through Shopee, has leaned more heavily on shipping subsidies to stimulate GMV in price-sensitive segments. As Amazon and Sea Limited compete for transaction share, the durability of MercadoLibre’s GMV momentum will hinge on its ability to sustain transaction growth efficiently amid differing competitive playbooks.
MELI’s Share Price Performance, Valuation and Estimates
MELI shares have declined 21% in the past six months, underperforming the Zacks Internet-Commerce industry and the Zacks Retail-Wholesale sector’s increase of 5.6% and 4.7%, respectively.
MELI’s Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, MELI stock is currently trading at a forward 12-month Price/Sales ratio of 2.77X compared with the industry’s 2.1X. MELI has a Value Score of C.
MELI Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MELI’s fourth-quarter 2025 earnings is pegged at $11.66 per share, down by 1.6% over the past 30 days, indicating a 7.53% year-over-year decline.
Image: Bigstock
Can MercadoLibre's GMV Momentum Drive Further Upside in the Stock?
Key Takeaways
MercadoLibre (MELI - Free Report) is positioning Gross Merchandise Volume as the primary lever for extending its growth trajectory across Latin America. The company's decision to lower Brazil's free shipping threshold from R$79 to R$19 represents a structural shift toward capturing everyday, lower-ticket purchases that represent a large pool of latent GMV in a region where e-commerce penetration remains in the mid-teens. This approach targets transaction frequency expansion rather than relying on episodic demand spikes or rising average order values.
Early indicators suggest this approach could support continued GMV expansion. The lower shipping threshold drove sold items growth to 42% year over year in Brazil during the third quarter of 2025, while new listings in the R$19-R$79 price band tripled year over year. The combination of increased purchase frequency and expanded assortment depth in price-sensitive categories indicates that both sides of the marketplace are responding to the structural incentive change. If buyer engagement and seller listings continue scaling together, GMV growth may become increasingly self-reinforcing.
Visibility into the near-term trajectory remains constructive. The Zacks Consensus Estimate for MercadoLibre’s fourth-quarter 2025 GMV is pegged at $19.04 billion, indicating 31% year over year growth and a sequential acceleration of 15% from the third-quarter level of $16.5 billion. Such an outlook implies rising transaction density into the peak seasonal period, supporting the view that GMV momentum could extend beyond a single quarter. The company's expanding logistics infrastructure and improving unit economics in fulfilment operations provide capacity headroom to absorb higher transaction volumes without proportional cost increases.
However, execution risks remain as MercadoLibre navigates the tension between GMV growth and profitability. Direct Contribution margins compressed in Brazil as free shipping subsidies outpaced immediate revenue gains, while intensifying competition may require sustained promotional investments. Whether the company can maintain elevated transaction intensity without incremental cost pressure will ultimately determine if GMV momentum can drive further stock upside.
MELI Faces Intensifying Competition
Competition in Latin American e-commerce remains intense, with Amazon (AMZN - Free Report) and Sea Limited (SE - Free Report) pursuing volume-led strategies in overlapping markets. Amazon continues to emphasize logistics investments and Prime-led fulfilment to encourage repeat purchasing, though its regional presence remains more selective than MercadoLibre’s. Sea Limited, through Shopee, has leaned more heavily on shipping subsidies to stimulate GMV in price-sensitive segments. As Amazon and Sea Limited compete for transaction share, the durability of MercadoLibre’s GMV momentum will hinge on its ability to sustain transaction growth efficiently amid differing competitive playbooks.
MELI’s Share Price Performance, Valuation and Estimates
MELI shares have declined 21% in the past six months, underperforming the Zacks Internet-Commerce industry and the Zacks Retail-Wholesale sector’s increase of 5.6% and 4.7%, respectively.
MELI’s Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, MELI stock is currently trading at a forward 12-month Price/Sales ratio of 2.77X compared with the industry’s 2.1X. MELI has a Value Score of C.
MELI Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MELI’s fourth-quarter 2025 earnings is pegged at $11.66 per share, down by 1.6% over the past 30 days, indicating a 7.53% year-over-year decline.
MercadoLibre, Inc. Price and Consensus
MercadoLibre, Inc. price-consensus-chart | MercadoLibre, Inc. Quote
MercadoLibre currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.