TLDR
- MercadoLibre (MELI) fell about 8% after hours to around $1,600 following its Q3 report.
- Net income was $448 million, below the $476 million analysts expected.
- Revenue rose 45% to $10.75 billion, beating estimates on Brazil strength.
- Operating margin dropped to 6.3% after fulfillment capacity grew about 20% in one quarter.
- The CEO said outside AI shopping agents can’t place orders on the platform for now.
MercadoLibre (MELI) stock fell about 8% in after-hours trading Wednesday, to around $1,600. The drop followed a third-quarter profit miss.
The company paid for warehouse space before the holiday sales arrived. Net income was $448 million, short of the $476 million analysts wanted, per LSEG data.
Profit still grew about 6% from a year ago. That ended a run of three straight quarterly declines.
Adjusted earnings per share came in at $8.83. Analysts had looked for $9.34.
Revenue was the bright spot. Net revenue and financial income climbed 45% to $10.75 billion, above the $10.66 billion consensus.
Paying for Space Before the Rush
MercadoLibre added about 20% more fulfillment capacity from the prior quarter. A year ago, the same jump was 10%.
The goal was to be ready for Black Friday and other big sales events. The extra space brings costs now, but the matching sales come later.
CFO Martin de los Santos put it plainly to Reuters. “The quarter when you are building capacity, you don’t have the revenues yet, so you have the cost,” he said.
Operating income was $676 million, a 6.3% margin. That compares with nearly 10% a year earlier and the 7% analysts expected.
Free shipping added to the load after expansions in Argentina and Brazil. The company also lowered its free shipping thresholds, so it now ships more small orders.
Fuel costs rose too, and MercadoLibre raised shipping fees for merchants. Sales and marketing costs climbed to 11.6% of revenue as Brazil’s affiliate program grew.
Brazil still led growth, with gross merchandise volume up 36% excluding currency effects. Mexico grew 21% as tax reform and weaker spending weighed on demand.
Argentina rose 40% despite soft consumption. Total gross merchandise volume hit $23 billion, up 38%.
Credit Gets Careful, AI Gets a Pause
Payment volume at Mercado Pago rose 53% to $109 billion. Fintech monthly active users grew 29% to 93 million.
The credit portfolio grew 62% to nearly $18 billion, though that pace has slowed. De los Santos said lending is “a bit more conservative” in Brazil and Argentina.
CEO Ariel Szarfsztejn said MercadoLibre will not let outside AI shopping agents place orders on its platform for now. He said the company wants to build that experience itself.
MercadoLibre is testing its own AI shopping assistant with a small group of users. The stock is down about 14% this year, and the company closed a $1 billion bond issue in September.
