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Does MercadoLibre's Expanding Credit Book Elevate Risk in 2026?
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Key Takeaways
MELI's credit book remains early in seasoning, raising default volatility as portfolios mature into 2026.
Macro strain adds risk: Argentina inflation hit 31.4%, and Mexico's 2026 GDP outlook was cut to 1.5%.
MELI's funding costs rose in Argentina as election-driven volatility weighed on risk-adjusted returns.
MercadoLibre (MELI - Free Report) enters 2026 with a credit profile that is materially exposed to borrower stress, funding cost swings and macro volatility, as lending expansion becomes the dominant driver of fintech growth. The credit book is scaling rapidly across Brazil, Mexico and Argentina, shifting risk away from transactional exposure toward balance-sheet exposure. The Zacks Consensus Estimate for fourth-quarter 2025 fintech revenues is pegged at $3.63 billion, indicating a 45% year-over-year increase. However, this revenue acceleration increasingly reflects reliance on consumer lending rather than lower-risk payment volumes.
The pace of expansion elevates credit risk by increasing the share of early-stage cohorts that have not been tested across a complete economic cycle. Newer cohorts typically exhibit higher default volatility, while loss curves normalize only after multiple quarters of seasoning. Even though net interest margin after loan loss provisions stood at 21% in the third quarter, Argentina remained a pressure point due to elevated funding costs tied to election-driven market volatility. This suggests how funding costs and portfolio mix can weaken risk-adjusted returns as lending scales.
Macroeconomic conditions further intensify credit risk heading into 2026. Argentina’s inflation accelerated to 31.4% in November 2025, reversing the disinflation trend seen earlier in the year. Inflation persistently above 30% continues to erode real purchasing power, increasing repayment stress for unsecured borrowers. MercadoLibre’s late third-quarter 2025 credit card launch in Argentina places first-year cohorts directly into this renewed price instability. In Mexico, GDP growth projections have been revised down to 1.5% for 2026 amid global trade uncertainty, constraining income growth as newer, less seasoned cohorts dominate the portfolio.
With credit portfolios still early in their seasoning cycle, MELI faces elevated credit risk in 2026. In volatile, high-rate markets, the expanding credit book directly elevates risk, reinforcing concerns around credit-led growth for 2026.
MELI Faces Intense Competition
MercadoLibre faces intense competition from the likes of Sea Limited (SE - Free Report) and Nu Holdings (NU - Free Report) , which approach credit expansion with greater restraint. Sea Limited keeps consumer lending as a smaller component of its fintech strategy, reducing balance-sheet exposure as Sea Limited prioritizes payments-led growth. Nu Holdings operates under a regulated banking framework, allowing it to scale credit more gradually with tighter underwriting discipline. Relative to Sea Limited and Nu Holdings, MELI’s faster credit expansion increases sensitivity to macro and funding risks in 2026.
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 1.6% and 1.5%, 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 2.71X compared with the industry’s 2.12X. 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
Does MercadoLibre's Expanding Credit Book Elevate Risk in 2026?
Key Takeaways
MercadoLibre (MELI - Free Report) enters 2026 with a credit profile that is materially exposed to borrower stress, funding cost swings and macro volatility, as lending expansion becomes the dominant driver of fintech growth. The credit book is scaling rapidly across Brazil, Mexico and Argentina, shifting risk away from transactional exposure toward balance-sheet exposure. The Zacks Consensus Estimate for fourth-quarter 2025 fintech revenues is pegged at $3.63 billion, indicating a 45% year-over-year increase. However, this revenue acceleration increasingly reflects reliance on consumer lending rather than lower-risk payment volumes.
The pace of expansion elevates credit risk by increasing the share of early-stage cohorts that have not been tested across a complete economic cycle. Newer cohorts typically exhibit higher default volatility, while loss curves normalize only after multiple quarters of seasoning. Even though net interest margin after loan loss provisions stood at 21% in the third quarter, Argentina remained a pressure point due to elevated funding costs tied to election-driven market volatility. This suggests how funding costs and portfolio mix can weaken risk-adjusted returns as lending scales.
Macroeconomic conditions further intensify credit risk heading into 2026. Argentina’s inflation accelerated to 31.4% in November 2025, reversing the disinflation trend seen earlier in the year. Inflation persistently above 30% continues to erode real purchasing power, increasing repayment stress for unsecured borrowers. MercadoLibre’s late third-quarter 2025 credit card launch in Argentina places first-year cohorts directly into this renewed price instability. In Mexico, GDP growth projections have been revised down to 1.5% for 2026 amid global trade uncertainty, constraining income growth as newer, less seasoned cohorts dominate the portfolio.
With credit portfolios still early in their seasoning cycle, MELI faces elevated credit risk in 2026. In volatile, high-rate markets, the expanding credit book directly elevates risk, reinforcing concerns around credit-led growth for 2026.
MELI Faces Intense Competition
MercadoLibre faces intense competition from the likes of Sea Limited (SE - Free Report) and Nu Holdings (NU - Free Report) , which approach credit expansion with greater restraint. Sea Limited keeps consumer lending as a smaller component of its fintech strategy, reducing balance-sheet exposure as Sea Limited prioritizes payments-led growth. Nu Holdings operates under a regulated banking framework, allowing it to scale credit more gradually with tighter underwriting discipline. Relative to Sea Limited and Nu Holdings, MELI’s faster credit expansion increases sensitivity to macro and funding risks in 2026.
MELI’s Share Price Performance, Valuation & 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 1.6% and 1.5%, 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 2.71X compared with the industry’s 2.12X. 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 #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.