MercadoLibre’s (NASDAQ: MELI) Q4 results and 2026 outlook are reason enough to buy this stock. The company is growing, outperforming peers, and has only reached 50% of its anticipated penetration.
While the results left something to be desired, the 10% share price decline is an overreaction to business investments that pay off.
Mercado Libre is well-known for an upfront, aggressive investment approach in which they pay now because they know customer traffic will follow.
What this means for investors is a sustained, high-double-digit growth pace and profitability to drive growth, financial health, and improve shareholder value.
MercadoLibre Issues Mixed Results as Investment Cuts Into Profits
Mercado experienced a strong quarter, with revenue growth accelerating both sequentially and year over year, reaching over 44.5%. The gains were driven by increased merchant and consumer traffic, with gross merchandise volume up 37% and strength across all regions and business segments. Critical growth markets, including Brazil, Mexico, and Argentina, grew at accelerated rates of 37%, 41%, and 72% on a foreign-exchange-neutral basis, underpinning a systemwide 40% increase in commerce channels and a 51% increase in fintech revenue.
Margins are the sticking point because increased spending is not guaranteed to pay off. However, MercadoLibre has proven successful with its strategy, which provides consumers with incentives to use the service, and they do so where it's available. Among the incentives are logistics services for merchants and free shipping on qualifying orders, policies that resonate with its users across borders. While earnings fell short by 41 cents, profitability remains healthy, and earnings are ample at $11.03 per share.
A critical detail is in the outlook, as the company is expected to continue growing revenue and its earnings base substantially in the upcoming year. Consensus earnings estimates are above 50% and may be a low-ball given the trends.
Not only is MercadoLibre aggressively working to fully address its market, but the market is also growing and accelerating its digitization. The trio provides a robust tailwind, as reflected in the revenue history. Earnings can be spotty quarter to quarter, but revenue growth is consistent and outpaces estimates nearly 100% of the time. Eventually, aggressive investment will slow and become another tailwind for profits.
Analysts Respond Favorably: Near-Term Headwinds Versus Growth
The analysts’ response is favorable, with the handful of revisions MarketBeat tracked the day of the release affirming the Moderate Buy consensus. A few reduced their price targets, but all noted bullish factors offsetting the near-term spending headwind. Among them is a pricing increase in Brazil that may boost earnings per share by up to 3%; another is strong growth in core markets. Overall, few analysts moderated their targets, pointing to a range near or slightly below the consensus. The consensus target forecasts a 60% upside in MELI's stock price, while the low-end range indicates MELI at deep-value levels, offering about 35% upside.
Analysts see MELI’s late-February pullback as a buy-the-dip opportunity, and institutional trends suggest the group will be a buyer. Institutional data reveals that this group owns about 87% of the stock and has accumulated it in three of the past four and seven of the past eight quarters. Buying activity ramped in late 2025, hit a high in early 2026, and is likely to remain bullish amid the price pullback. If MELI’s growth outlook was a buy at $1975 in late December 2025, it's a screaming buy at $1750 in early 2026.
MercadoLibre Builds Value for Investors Alongside Its eCommerce Network
MercadoLibre’s balance sheet reveals the health of its business and the impact of its growth efforts. Highlights from 2025 include increased liabilities, but debt remains low, liability increases are offset by asset gains, and equity is rising. Equity, the measure of shareholder value, increased by more than 55% to over $6.7 billion and will continue to increase over time. MercadoLibre is forecast to sustain a moderate double-digit compound annual growth rate through the middle of the next decade, growing its emerging markets business by at least 150% in that time.
The biggest risk for MELI shareholders is margin compression. While investment spending will slow over time, there are fears that market economics will reset, putting margins under pressure. In this scenario, MELI’s revenue will grow, but earnings may lag, which could drag on share prices.
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The article "MercadoLibre Sold Off After Earnings—Why Bulls See a Buy-the-Dip Setup" first appeared on MarketBeat.
