MercadoLibre stock gapped up to record high in Thursday trading, after the Latin American e-commerce company reported first-quarter results that were easily ahead of expectations.
The strong results are adding to a more than 40% year-to-date rally for MercadoLibre stock already this year, which is on the IBD 50 list of premium growth stocks.
Earnings for MercadoLibre in its March-ended quarter grew 44% year over year to $9.74 per share, the company said in a news release. That beat analyst expectations for earnings of $8.27 per share, according to FactSet.
Revenue increased 37% to $5.9 billion, easily topping analyst estimates of $5.47 billion.
On the stock market today, MercadoLibre stock is up more than 7% at 2,429 in recent morning trades. Shares reached a record high, pushing further above a 2,202 buy point from a double-bottom chart base. MELI stock broke out above that level in late April, according to IBD MarketSurge.
Argentina 'Recovery In Demand'
Often described as the Amazon of Latin America, MercadoLibre operates an e-commerce platform across 18 countries in the region. Its largest markets are Brazil, Mexico and Argentina, where it was founded. MercadoLibre also offers Mercado Pago, a fintech business that includes a digital wallet, credit and payments services.
In a letter to shareholders, MercadoLibre's management wrote that "Argentina performed exceptionally well, with last year's recovery in demand strengthening even further."
Gross merchandise volume sold in Argentina increased 125% year over year, the company said, compared with 20% growth in Brazil and 26% growth in Mexico.
Total gross merchandise volume rose 17% to $13.3 billion. Total payment volume for its fintech operations grew 43% to $58.3 billion, according to the company's shareholder letter.
MercadoLibre does not typically provide current-quarter guidance through its investor letter. The company said in the note that it is focused on "profitable growth" with several opportunities ahead.
"Taking share from physical stores, which still account for approximately 85% of retail spend in Latin America, is one of the largest of these opportunities," MercadoLibre's shareholder letter said. "We have less than 5% share of the region's total retail market. Continuing to invest in our value proposition to make the online buying experience more attractive than offline is the best way to increase our share."
Wedbush analyst Scott Devitt upped his price target to 2,800 from 2,400 for MercadoLibre stock Wednesday night. He also reiterated an outperform call.
"We are encouraged by the strength in Q1 results and the magnitude of the profit beat despite rapid growth in lower-margin credit products, ongoing investments in fulfillment, and limited visibility into the macro backdrop across several regions," Devitt wrote in a client note.
MercadoLibre Stock's Technical Ratings
U.S.-listed MercadoLibre stock has significantly outperformed the S&P 500 with a 41% gain over the past 12 months, helped in part by optimism about MercadoLibre's Argentina business and the company's lower exposure to U.S. tariffs. Shares also rallied following MercadoLibre's fourth-quarter earnings report in February.
Along with the IBD 50 list, MercadoLibre stock is on IBD's Tech Leaders and Global Leaders lists.
Coming into the report, MercadoLibre stock had a best-possible IBD Composite Rating of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating.
