MELI’s Credit Expansion Buried by 148th-Ranked Trading Volume and Profit Pressures

Mercadolibre (MELI) closed up 0.33% on August 27, with a trading volume of $0.54 billion, ranking 148th in the market. The stock’s performance contrasts with underlying risks in its credit expansion strategy. The company’s credit portfolio surged 91% year-over-year to $9.3 billion in Q2 2025, but asset quality deteriorated, with Net Interest Margin After Losses (NIMAL) falling to 23% from 31.1%. Credit cards now account for 43% of lending, yet the segment remains breakeven despite years of investment. While early-stage delinquencies improved to 6.7%, overdue loans exceeding 90 days remained at 18.5%, signaling persistent stress. Rising provisioning costs and expansion into high-risk markets like Argentina weighed on net income, which declined 1.6% to $523 million, despite revenue growth.

Competitors like Nu Holdings and Sea Limited highlight divergent approaches. Nu’s more conservative lending strategy yielded a 15.1% NIMAL in Brazil, contrasting MELI’s aggressive expansion. Sea Limited’s pivot to profitability over growth aligns with sector trends, underscoring the risks of Mercadolibre’s rapid scale-up. Analysts note a widening gap between credit growth and profit generation, with MELI’s forward price-to-sales ratio at 3.74x, above the industry average. Downward revisions to earnings estimates suggest caution, as margin pressures and asset quality concerns linger.

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