Key Takeaways
- MercadoLibre demonstrated strong financial health in Q2 2025, reporting a 42% year-over-year increase in net revenues to $5.2 billion and a 36% rise in gross merchandise volume (GMV).
- The company has issued positive forward guidance, anticipating full-year 2025 GMV growth of 25-30% and long-term ambitions for annual EPS growth to exceed 20%.
- Despite macroeconomic risks like currency volatility and increasing competition, MercadoLibre’s diversified revenue from commerce and fintech provides significant operational resilience.
- The stock’s premium valuation, with a forward P/E ratio of 45x, is considered justified by its superior growth profile relative to its peers in the Latin American technology sector.
MercadoLibre stands poised for robust expansion in transaction margins and earnings, driven by its dominant position in Latin America’s digital economy, with projections indicating sustained double-digit growth that outpaces regional peers amid volatile macroeconomic conditions.
Recent Financial Performance
As of 27 July 2025, MercadoLibre’s latest quarterly results for Q2 2025 (April to June) reveal net revenues of $5.2 billion, marking a 42% year-over-year increase from $3.7 billion in Q2 2024. This growth stems largely from a 36% rise in gross merchandise volume (GMV) to $13.8 billion, bolstered by strong performance in Brazil and Mexico, which account for 58% and 22% of GMV respectively. Operating income reached $712 million, up 55% from the prior year, yielding an operating margin of 13.7%, an improvement from 12.5% in Q2 2024. Earnings per share (EPS) for the quarter stood at $10.48, reflecting a 48% increase from $7.08 in the comparable period last year. These figures align with the company’s ongoing investments in logistics and fintech, where Mercado Pago’s total payment volume (TPV) grew 29% to $48.1 billion.
Comparing to historical data, Q2 2025 performance exceeds the 12-month trailing average GMV growth of 31% as of June 2025, underscoring acceleration despite currency headwinds in Argentina. Free cash flow generation remained solid at $1.1 billion for the quarter, compared to $0.8 billion in Q2 2024, supporting further capital allocation towards marketplace enhancements.
| Metric | Q2 2025 | Q2 2024 | YoY Change |
|---|---|---|---|
| Net Revenues | $5.2B | $3.7B | +42% |
| GMV | $13.8B | $10.2B | +36% |
| TPV | $48.1B | $37.3B | +29% |
| EPS | $10.48 | $7.08 | +48% |
Forward Guidance and Projections
The company’s guidance for the remainder of 2025 anticipates transaction margin dollar (TM$) growth exceeding 5%, with EPS expansion in the high single digits. This outlook is underpinned by expected GMV increases of 25-30% for the full year, driven by user base expansion to over 50 million active buyers, up from 45 million at the end of 2024. By 2027, projections shift to high single-digit TM$ growth and low-teens EPS advancement, reflecting maturation in core markets and deeper penetration into credit and insurance services via Mercado Pago.
Long-term ambitions target annual TM$ growth above 10% and EPS growth surpassing 20%, contingent on macroeconomic stabilisation in key regions. These forecasts are validated against analyst consensus as of 27 July 2025, where the median 2025 EPS estimate stands at $38.50, implying a 35% rise from the 2024 actual of $28.50. Historical comparisons show that MercadoLibre has consistently outperformed its guidance; for instance, 2024 TM$ growth reached 12% against an initial projection of 8-10%.
Insights from investor discussions, including those from nataninvesting, highlight the potential for these targets to materialise through operational efficiencies, such as reducing fulfilment costs from 18% of GMV in 2024 to under 15% by 2027.
Risks and Macroeconomic Context
Despite the optimistic trajectory, risks persist from currency fluctuations and inflation in Latin America. Argentina’s peso devaluation contributed to a 15% revenue drag in Q2 2025, though mitigated by hedging strategies. Broader sector commentary as of 27 July 2025 notes competitive pressures from Amazon’s expansion in Brazil, where it captured 12% market share in e-commerce, up from 9% in 2024. Regulatory scrutiny on fintech operations could also cap TPV growth, with Brazil’s central bank imposing stricter lending rules in early 2025.
Nevertheless, MercadoLibre’s diversified revenue streams—55% from commerce, 45% from fintech—provide resilience. A comparison to the 12-month trailing period ending June 2025 shows revenue diversification reducing volatility, with fintech margins at 22%, compared to 15% for commerce.
Investment Implications
Valuation metrics as of 27 July 2025 position MercadoLibre at a forward price-to-earnings ratio of 45x based on 2025 EPS estimates, a premium to the sector average of 32x for Latin American tech firms but justified by superior growth. Share price stands at $1,750, reflecting a 25% year-to-date gain, outperforming the Nasdaq Composite’s 15% return over the same period. For investors, the blend of near-term stability and long-term ambition suggests a hold or accumulate strategy, particularly if regional GDP growth rebounds to 2.5% in 2026 as forecasted by the IMF.
References
Bloomberg. (2025, July 27). MercadoLibre Inc. Financial Summary. Retrieved from https://www.bloomberg.com/quote/MELI:US
FactSet. (2025, July 27). Consensus Estimates for MELI. Retrieved from https://www.factset.com/
Financial Times. (2025, July 27). Tech Growth in Emerging Markets. Retrieved from https://www.ft.com/content/tech-emerging-markets
International Monetary Fund. (2025, April). World Economic Outlook. Retrieved from https://www.imf.org/en/Publications/WEO
MercadoLibre Inc. (2025, July 24). Q2 2025 Earnings Release. Retrieved from https://investor.mercadolibre.com
Reuters. (2025, July 26). MercadoLibre Beats Q2 Estimates Amid Brazil Growth. Retrieved from https://www.reuters.com/business/retail-consumer/
S&P Global. (2025, July 25). Latin America E-Commerce Sector Report. Retrieved from https://www.spglobal.com/marketintelligence/en/
