MercadoLibre is the IBD Stock of the Day for Thursday, as the Latin American e-commerce firm hopes to build on big gains last year. MELI stock appears to be forming a new base.
On the stock market today, MELI stock rose 1.3% to close at 1519.38. Further, MELI shares gained 86% in 2023.
MELI stock is flashing a positive signal in bouncing up from its 50-day moving average. More cautious investors might wait for MercadoLibre stock to form a new base, which appears likely this week.
Founded in Argentina in 1999, MercadoLibre is often called the Amazon.com of Latin America. But it also is a leading fintech company for the region, offering a popular Venmo-like digital wallet, among other services.
Both of its business lines surged during the pandemic, with MercadoLibre able to build off that growth.
Expectations For Q4
MELI stock's big year has raised expectations ahead of MercadoLibre's fourth-quarter 2023 earnings report next month.
Analysts expect the company to post adjusted earnings of $7.21 per share, representing 122% growth, according to FactSet. Further, analysts project sales for the quarter will grow 36% year over year to $4.1 billion.
Overall, MELI stock analysts project the company will post full-year revenue growth of 35% at $14.2 billion for 2023, according to FactSet. In 2022, sales climbed 49% to $10.5 billion and 78% year over year in 2021.
MercadoLibre said in a news release in late November that it set a Black Friday sales record. Additionally, the company said gross merchandise sales for the month were pacing ahead of last November's total by 39%.
In the third quarter, MercadoLibre's earnings surged 180% year over year and revenue grew 40%.
The company also reported that more than 167 million people across Latin America used either its e-commerce or fintech offerings, up 31% from the same period last year.
MercadoLibre's "entrenchment in the Latin American online commerce and financial technology ecosystems appears to be growing ever stronger," MELI stock analyst Sean Dunlop of Morningstar said in a note following the company's most recent earnings report.
Eyeing A New Base For MELI Stock
With recent action, MELI stock is pacing toward forming a flat base.
On Nov. 14, shares surged past a 1,398.59 buy point out of a cup-with-handle base, according to IBD MarketSmith. MELI stock rose to an intraday high 1,660 on Dec. 1 before pulling back in recent weeks.
The bounce from the 50-day line could offer a buy signal, though MarketSmith shows shares are still trading below its 21-day moving average.
Meanwhile, MercadoLibre ranks No. 1 among 60 stocks in the IBD MarketSmith Retail-Internet industry group. Amazon ranks fifth.
Also, MELI stock has a best-possible IBD Composite Rating of 99, according to IBD Stock Checkup. The score means MELI stock currently tops 98% of stocks in key metrics and technical strength.
Beyond that, the company's Relative Strength score of 91 indicates it is outperforming 91% of stocks based on price growth.
And MELI is on the IBD 50 and IBD Tech Leaders lists.
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