Key Takeaways
-
MercadoLibre fell 14% over three months to $1,625, with the steepest drop coming after Lula’s surprise runoff win sent Brazilian assets lower on October 26.
-
Brazil supplied 52.6% of 2025 revenue, so a weaker real and consumer credit now matter more than the 50% sales growth the company posted in the second quarter.
-
Second-quarter operating margin fell to 6.7% from 12.2% as MercadoLibre cut fees and expanded credit, while Shopee keeps adding capacity in Brazil.
-
The November 4 report covers a quarter that ended before the election, so management’s Brazil commentary matters as much as the numbers.
Brazil voted, and MercadoLibre shareholders paid for it.
MercadoLibre (MELI:NASDAQ) closed Friday at $1,625, down 14% over three months and 32% below its 52-week high of $2,388. The sharpest hit came on October 26, the first trading day after President Lula’s surprise runoff win. Shares fell more than 11% early that session as investors dumped Brazilian assets.
Competition isn’t easing either. Sea Limited (SE:NYSE) increased capacity for its Shopee marketplace in Brazil by 60% in one year, and it is waiting on regulation to start selling medicine there. That lands right where MercadoLibre is expanding.
MercadoLibre reports third-quarter results on November 4, after the close.
Election night, then the selloff
Three weeks earlier, the mood was very different. Flávio Bolsonaro took 47% of the first-round vote on October 4 against Lula’s 45%, and MercadoLibre rallied with Brazilian banks.
The runoff erased that trade. Investors now worry about Brazil’s fiscal path, a weaker currency and what both mean for consumer borrowers.
The exposure is hard to overstate:
-
Brazil generated $15.2 billion of MercadoLibre’s $28.9 billion in 2025 revenue.
-
The company planned to invest about 57 billion reais, roughly $10.9 billion, in Brazil this year, 50% more than in 2025.
-
It launched one-hour deliveries and expanded its pharmacy business there in September.
The round trip shows up clearly in the share price.
The stock now trades just 9% above its 52-week low of $1,495.
Growth bought with margin
MercadoLibre’s second quarter showed the trade-off it is making. Revenue grew about 50% to more than $10 billion, and GMV rose 36% on an FX-neutral basis. But operating margin fell to 6.7% from 12.2% a year earlier.
That compression is deliberate. The company lowered free-shipping thresholds and seller fees in Brazil, and it kept growing credit fast. Its loan book reached $16.4 billion, up 75%.
