Why Shay Agrees with Michael Burry on Mercado Libre (MELI)

追加: 2026-05-12

[00:00:00]I'm Shay Balor and this is Earnings Edge. So, Mercado Libre just reported a quarter that the market clearly hated on because of the margins, but I actually increased my position about 25% cuz I think that investors are punching the exact thing that makes this company such a rare long-term compounder. And guess what? Michael Burry agrees as well cuz he initiated a position last week, which is something I never thought I'd hear myself say that me and Michael Burry own the same stock. Before we get into the earnings, let's get dig into what Mercado Libre actually does if you're unfamiliar. So, Mercado Libre isn't just an e-commerce company. It is becoming the Amazon, the PayPal, the Shopify, the Square, and the logistical layer for Latin America all in one platform. It has the marketplace through Mercado Libre, it has the payments through Mercado Pago, it has the credit products, it has the ads, the logistics, merchant tools, uh first-party commerce, cross-border trade. Like, it has it all.

[00:00:51]It's a one-stop shop. So, uh what matters to me is that Latin America is still heavily under appreciated across e-commerce, digital payments, credits, online banking, and digital advertising compared to where the US is today. So, when Mercado Libre reinvests, it is not reinvesting into a saturated retail market. It is reinvesting into a region where the opportunity is still wide open. Think of where Amazon was over a decade ago with e-commerce. That's how early it is in Latin America. So, the key numbers in the earnings report that matter most to me was Brazil GMV was clearly re-accelerating to 38% local currency growth, while items sold in Brazil also accelerated to 56%. That tells me that the lower free shipping threshold is doing exactly what it's supposed to do.

[00:01:41]Unique buyers accelerated, conversion improved, frequency improved, retention improved, and engagement metrics also reached record levels. This is not a broken business, although this is not the stock itself is trading at a record-low valuation. That screams to me opportunity, so that is why I've been adding what feels like every single day since they reported because this is a company that is deliberately pulling demand forward. It is widening the gap between itself and everyone else in Latin America commerce. The market is just clearly focused on margin compression, but the reason, like I said earlier, on why I added is because the investment cycle is already showing up in the operating metrics. I mean, Brazil shipping cost went down 17% year over year. Even as Mercado Libre was pushing harder into lower average selling price free shipping, the value proposition kept getting better and better for customers while the logistics network became more efficient. That's going to compound at a rapid pace over the next decade plus. And that's also the big difference between buying growth and scaling its better economics. Uh some level lower price categories that were previously margin dilutive are already reaching break even, huge plus. Management already recovered roughly half of the profit hit from the shipping change through scale and operational improvements. Huge. That shows that things are going to improve as they scale. So, the near-term bump is digestible. So, I think that it's really important because to think about all these specific metrics, not just the revenue and EPS, because the bear case is that Mercado Libre is just simply buying growth. I do not think that's what the numbers are showing. Uh they are investing, big difference, and they're investing into a machine where the scale continues to improve the economics. Uh so, again, I get why the market sold off the stock because it wanted a clean margin expansion, especially in the previous quarter at a similar heart burn to the market uh was experiencing on uh essentially them investing in their machine again and coming at the expense of their margins. Same thing happened in So, I think the market was hoping it was a one-off. Doesn't feel that way, and I'm totally fine with that because Mercado Libre delivered a quarter where revenue growth hit a four-year high, Brazil accelerated, fintech remains really strong, credit quality actually held up a lot more than the bears assumed it would, shipping efficiency also improved, customer engagement reached record levels, but margins came under pressure because management is leaning into the opportunity, and why wouldn't they? They are seeing the ROI on their investments. They're doing all these moves for 5-plus years down the line. The market just cares for the next 3 months. That's the disconnect, and that's where if you're a long-term investor and you have a wide time horizon, these are one of the few opportunities where a company has a clear monopoly in a secular growth theme that has plenty of runway, but the market is punishing them on near-term problems. So, from my perspective, this is one name that I is at the top of my buy list. I've been adding every single day, especially when what feels like all the demand in the market is being vacuumed and sucked into the AI infrastructure and space thematics, which again, I have a lot of exposure in those themes. So, I I love to see it, but a lot of future demand is being factored in today's valuations in those specific themes. So, if you have capital like I do, where am I going to look?

[00:05:13]It's in one of these kind of companies.

[00:05:14]So, I think the reason uh I found this quarter so important is Mercado Libre is still in empire-building mode. I mean, I get that probably most mature retailers would uh try to squeeze another 50 basis points of margin out of the business.

[00:05:32]Like, oh, okay, maybe stock goes up 10, 12% in the near term, but it does open up for competition down the line if they kind of don't reinvest into the machine that created such a high barrier of entry for any competitors to get into their space. Like, I'm talking to you, Amazon. Talking to you, Sea Limited. I'm talking to you, Alibaba. So, Mercado Libre is doing the opposite. It's truly using its scale advantage to make the customer experience better, lower the friction, increase frequency, and then strengthen the logistics network while the long-term opportunity is still enormous. So, I think the market is completely misreading the quarter. Michael Burry clearly agrees with that as well. Uh margin pressure is very real though, but it's not random.

[00:06:14]Big difference. Uh and I think that the optionality is still massive, and we are nowhere close to the ceiling on what Mercado Libre is going to become. And yeah, uh so I think that this is a very hard flywheel to recreate, and I am going to make this probably my top position in my family portfolio.

[00:06:34]Thanks for tuning in.