MercadoLibre (MELI) Stock: Why Major Investors Keep Accumulating Despite Earnings Miss

TLDR

• Capital Research Global Investors boosted its MELI holdings by 22.5% during Q4, purchasing an additional 408,939 shares to total 2,225,031 shares worth approximately $4.48 billion.
• Hedge funds and institutional investors now hold 87.62% of MercadoLibre’s outstanding shares.
• First-quarter revenue surged 49% compared to the prior year, reaching $8.85 billion and exceeding projections, while earnings per share of $8.23 fell short of the $8.75 analyst forecast.
• Board member Alejandro Nicolas Aguzin purchased 600 shares at $1,655.93 apiece during May, expanding his personal stake by 12.62%.
• The analyst community maintains a Moderate Buy rating with a mean price objective of $2,255.33, despite multiple firms reducing their targets post-earnings.

Shares of MercadoLibre (MELI) began Friday’s session at $1,607.80, declining 1.7% and trading substantially beneath the 52-week peak of $2,645.22. The stock currently sits below both its 50-day moving average of $1,720.81 and its 200-day moving average of $1,887.84.

MercadoLibre, Inc., MELI

Capital Research Global Investors emerged as the most significant institutional buyer. During the fourth quarter, the investment firm expanded its MELI stake by 22.5%, acquiring 408,939 shares to reach a total position of 2,225,031 shares valued at approximately $4.48 billion. This position now ranks as the firm’s 24th largest holding, accounting for 0.8% of its overall portfolio.

Several additional institutional investors expanded their positions throughout the same period. Hardy Reed, Rothschild Investment, Interchange Capital Partners, Cornerstone Select Advisors, and Mitchell Capital Management each made incremental additions. Collectively, institutional investors and hedge funds control 87.62% of outstanding shares.

Regarding insider activity, Board Director Alejandro Nicolas Aguzin acquired 600 shares on May 22nd at a mean price of $1,655.93, totaling approximately $994,000 in purchases. This transaction increased his direct ownership to 5,355 shares, currently valued at over $8.8 million.

Q1 Earnings: Revenue Beats, EPS Misses

MercadoLibre unveiled its first-quarter financial results on May 7th. The company delivered revenue of $8.85 billion, representing a 49% increase year over year and surpassing the analyst estimate of $8.29 billion. This marked an impressive top-line performance.

Earnings per share, conversely, disappointed investors. The company reported $8.23, falling short of the consensus forecast of $8.75 by $0.52. The prior year’s comparable quarter generated EPS of $9.74 — marking a year-over-year decrease that drew market scrutiny.

The company maintains a return on equity of 29.58% with a net profit margin of 6.04%. Wall Street analysts project full-year earnings per share of $40.97. The stock currently trades at a price-to-earnings ratio of 42.43 and a PEG ratio of 0.99.

Analyst Price Targets Trimmed

The earnings shortfall triggered a series of price target reductions, although most analysts maintained favorable ratings.

JPMorgan reduced its price objective from $2,100 to $1,900 while maintaining a neutral stance. UBS decreased its target from $2,050 to $1,750, also neutral. Morgan Stanley lowered its target from $2,600 to $2,450 but retained an overweight rating. Goldman Sachs established a $2,100 price target. Daiwa downgraded from buy to hold with an $1,800 target.

Among 18 analysts tracking the stock, one assigns a Strong Buy rating, eleven recommend Buy, five suggest Hold, and one maintains a Sell rating. The consensus mean price target stands at $2,255.33 — approximately 40% above MELI’s current trading level.

MercadoLibre carries a market capitalization of $81.52 billion, maintains a current ratio of 1.16, and reports a debt-to-equity ratio of 0.63. The stock’s one-year low reached $1,495.00.