Saul Rosenthal | February 22, 2026 | Pre-Q4 FY25 (Q4 reports Feb 24, 2026)
Let me be upfront: MercadoLibre is NOT in my portfolio right now. It's on my watchlist. And after going through Q3 FY25, I'm asking myself whether that's a mistake.
Twenty-seven consecutive quarters of 30%+ revenue growth. TWENTY-SEVEN! On a base that is now $7.4 BILLION dollars in a single quarter. That is such a preposterous result that I keep re-reading the numbers just to make sure I have them right.
Prior Beliefs (entering this review):
Updated Beliefs (after Q3 FY25):
| | Q4 FY22 | Q1 FY23 | Q2 FY23 | Q3 FY23 | Q4 FY23 | Q1 FY24 | Q2 FY24 | Q3 FY24 | Q4 FY24 | Q1 FY25 | Q2 FY25 | Q3 FY25 | | | Dec-22 | Mar-23 | Jun-23 | Sep-23 | Dec-23 | Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | Sep-25 | |---|---|---|---|---|---|---|---|---|---|---|---|---| | Revenue ($m) | 3,245 | 3,221 | 3,550 | 3,927 | 4,409 | 4,333 | 5,073 | 5,312 | 6,059 | 5,935 | 6,790 | 7,409 | | YoY % | 52.3 | 43.3 | 36.7 | 46.0 | 35.9 | 34.5 | 42.9 | 35.3 | 37.4 | 37.0 | 33.8 | 39.5 | | Op Margin % [GAAP] | -- | -- | -- | -- | -- | ~13.3 | ~13.3 | 10.5 | 13.5 | 12.9 | 12.2 | 9.8 | | Net Margin % [GAAP] | -- | -- | -- | -- | 3.7 | ~9.3 | ~9.3 | 7.5 | 10.5 | 8.3 | 7.7 | 5.7 | | EPS [GAAP] | -- | -- | -- | $7.16 | 3.28| 7.95 | ~$9.31 | $7.83 | $12.60 | $9.74 | 10.31|**8.32** |
Trajectory: Reaccelerating. After a trough at 33.8% in Q2 FY25, YoY growth jumped back to 39.5%. Growth has stayed above 30% for 27 straight quarters. That is the single most important fact about this business.
| Metric | Q3 FY24 | Q4 FY24 | Q1 FY25 | Q2 FY25 | Q3 FY25 | Direction |
|---|---|---|---|---|---|---|
| GMV ($B, USD) | $12.9B | $14.5B | $13.3B | $15.3B | $16.5B | ↑ |
| GMV YoY (USD) | -- | 8% | 17% | 21% | 28% | ↑↑ |
| Items Sold (M) | 456 | 525 | 492 | 550 | 635 | ↑↑ |
| Unique Buyers (M) | 61 | 67 | 67 | 70.8 | 77 | ↑↑ |
| TPV ($B, USD) | $50.7B | $59.0B | $58.3B | $64.6B | $71.2B | ↑ |
| TPV YoY (USD) | -- | 33% | 43% | 39% | 41% | Stable-High |
| Fintech MAU (M) | 56 | 61 | 64 | 68 | 72 | ↑↑ |
| Credit Portfolio ($B) | -- | $6.6B | $7.8B | $9.3B | $11.0B | ↑↑ |
| NPL 15-90 day % | -- | -- | 8.2% | -- | 6.8% | ↓ (improving) |
| Commerce Rev ($m) | 3,139 | 3,554 | 3,303 | 3,839 | 4,174 | ↑ |
| Fintech Rev ($m) | 2,173 | 2,505 | 2,632 | 2,951 | 3,235 | ↑↑ |
The GMV USD acceleration from 8% to 28% over four quarters is REALLY something. GMV in USD was basically dead a year ago — currency-adjusted it looked better, but USD GMV is what puts food on the table for a US-listed stock. Now it's catching up.
Commerce: Finally firing on all cylinders.
Brazil items sold +42% after the shipping threshold reduction. They made a deliberate bet — we'll cut the free shipping threshold, accept some margin pain, and accelerate unit growth. Brazil responded immediately. Unit shipping costs went DOWN 8% QoQ because volume spreads fixed costs across more shipments. That's operating leverage in a marketplace model. This is exactly what Amazon did for years — invest in the flywheel, compress margins, gain share.
Fulfillment capacity up 41% YoY with NO unplanned centers. They are executing the logistics build exactly as planned.
Fintech: This is becoming MELI's most important asset.
Fintech MAU growing from 56M to 72M in four quarters — that is 29% user growth in one year. TPV at $71.2B growing 41% USD — that is a payments business growing faster than the e-commerce. Fintech revenue now 43.7% of total and rising. Credit card Brazil cohorts over 2 years old are now profitable. The credit card is the stickiest product they have — if they crack profitability here, it opens up enormous expansion. AUM at $15.1B growing fast.
Credit book: The one that keeps me up at night.
Gross credit portfolio at $11.0B with a 25.7% allowance — that means they're reserving $2.8B against potential losses. Is that enough? NPL improving from 8.2% to 6.8% is encouraging, but this is LatAm consumer credit, not Silicon Valley SaaS ARR. The book grew from $6.6B to $11.0B in three quarters. That is explosive growth. If the macro turns sour in Brazil — and Brazilian macros DO turn sour — this is the vulnerability.
I'm not saying the credit book is a problem. The improving NPL at scale is genuinely good news. But this is not a risk I can wave away like I might a "customer concentration" issue.
Margins: The honest story.
Op margin went from 13.5% (Q4 FY24) to 9.8% (Q3 FY25) in three quarters. That is a 370 basis point compression. Management says it's deliberate — shipping subsidies, marketing (11% of revenue), 1P scaling, credit card. And they're right that the Q3 reacceleration vindicates the spending. But "deliberate and temporary" needs to eventually become "deliberate and over." There is no timeline.
At 9.8% op margins with 9M FY25 annualized EPS of ~$38, the P/E is 53x. That's not value territory. The valuation is justified ONLY if margins recover and growth sustains. Both need to be true.
Grade: B+. They did what they said. The shipping threshold cut produced the items sold acceleration they promised. Credit card profitability emerging as expected. The "deliberate compression" narrative is coherent. HOWEVER: no timeline on margin recovery is a gap. "We will invest as long as the opportunity is there" is true AND unhelpful. I want to know what the normal operating margin looks like at scale. The FY23 peak was 14.6%. Is that the target? Higher? Lower? They won't say.
Banking license in Brazil: still pending. Mexico competitor Plata got a license ahead of them. That's a small red flag to monitor.
| Q3 FY24 | Q3 FY25 | YoY | |
|---|---|---|---|
| Brazil | $2,913M | $4,009M | +37.6% |
| Mexico | $1,145M | $1,651M | +44.2% |
| Argentina | $1,033M | $1,441M | +39.5% |
Mexico at +44% is the fastest-growing major market. Brazil is the largest at 54% of revenue. Argentina is noisy (97% local / 39% USD gap) but 34% items sold growth shows the underlying demand is there. Chile and Colombia are accelerating — the geographic expansion story is real.
At $1,997/share:
The key question is whether you think margins normalize back toward 12-14% as the investment cycle matures. If yes, current P/E overstates the real multiple by 30-40%. If margins stay compressed indefinitely, 53x earnings is hard to justify.
I don't have a price target — that's not how I invest. But I will say: at 3.4x run-rate revenues for a business growing 39% with the best market position in an underpenetrated $2 trillion LatAm economy... it doesn't scream expensive.
Consensus expects $8.52B revenue and $11.77 EPS. That would be:
What I'm watching:
I will NOT trade ahead of the print. Too much binary risk. If Q4 is strong AND margin stabilizes, I'd be very interested in starting a position.
MercadoLibre is one of maybe 5 businesses in the world that has sustained 30%+ revenue growth through 27 consecutive quarters at this scale. The commerce reacceleration in Q3 is real — GMV USD from 8% to 28% YoY is not noise. The fintech is becoming a true financial services powerhouse. The credit book improving at scale is genuinely good news.
My concerns are real too: margin compression with no timeline, $11B credit book growing explosively in LatAm macro, and a 53x P/E that leaves no room for error.
Action: WATCH. Not a current holding. Q4 FY25 in two days is the next major data point. If growth sustains above 37% AND margin stabilizes or gives any sign of inflection, this goes on my buy list.
Should we run away from this company??? Absolutely not. This is one of the great growth businesses of our era. The question is only whether this is the right entry point.
Best, Saul
| Dec 2023 | Dec 2024 | Sep 2025 | |
|---|---|---|---|
| Unrestricted Cash + ST Inv | $6.0B | $7.1B | $6.3B |
| Net Loans Receivable | $2.7B | $4.9B | $8.2B |
| Total Debt | $4.5B | $5.7B | $7.8B |
| Total Equity | $3.1B | $4.4B | $6.2B |
| Net Debt | ~($1.5B) | ~($1.4B) | ~$1.5B |
Balance sheet is solid. Equity growing. Restricted cash balloooned to $6.6B (regulatory reserves for the fintech). Net debt at $1.5B against a $30B run-rate business is manageable. No concerns here.