MELI Plummets 3.77% Amid Credit Risks and Fierce Fintech Competition – What’s Next for the Latin American E-Commerce Giant?

Summary
• Mercadolibre (MELI) trades at $1,996.2, down 3.77% from its intraday high of $2,037.5
• Credit portfolio expansion and rising loan defaults weigh on profitability
• Fintech rivals Sea Limited (SE) and Nu Holdings (NU) intensify competition in Latin America
• Options chain reveals speculative positioning with a leveraged call option (MELI20260918C2060) trading at 398,195% leverage

Today’s sharp selloff in Mercadolibre reflects mounting concerns over its credit-driven growth strategy and intensifying competition in the fintech space. With the stock trading near its 52-week low of $1,646, investors are recalibrating expectations as the company navigates margin pressures and regulatory scrutiny. The intraday range of $1,957–$2,037 underscores volatility, while technical indicators signal a bearish near-term bias.

Credit Expansion and Margin Strain Fuel Sell-Off
Mercadolibre’s 3.77% intraday decline is driven by deteriorating credit metrics and intensifying fintech competition. The company’s credit portfolio surged 83% YoY to $11 billion in Q3 2025, but rising loan defaults and funding costs have eroded profitability. Net Interest Margin After Losses fell to 21%, while 17.6% of loans are over 90 days past due. Meanwhile, rivals like Sea Limited and Nu Holdings are aggressively expanding digital lending in Brazil and Mexico, pressuring MELI’s market share. Analysts warn that the shift toward longer-duration credit cards and slower cohort maturity will keep margins under pressure until asset quality stabilizes.

Internet Retail Sector Volatility Amid E-Commerce Shifts
The Internet Retail sector remains volatile as e-commerce players adapt to shifting consumer behavior and regulatory scrutiny. Amazon (AMZN) rose 1.74% today, outperforming MELI as it leverages its retail media network to offset margin pressures. However, MELI’s unique focus on Latin American fintech integration—via Mercado Pago and credit expansion—has created a distinct risk profile. While Amazon benefits from global scale, MELI’s regional exposure to high-risk credit portfolios and currency fluctuations amplifies its vulnerability to macroeconomic shocks.

Bearish Setup and High-Leverage Options Play
• 200-day MA: $2,273.62 (well above current price)
• RSI: 51.3 (neutral but trending lower)
• MACD: -19.90 (bearish divergence)
• Bollinger Bands: Price near lower band ($1,946.24)
• Support/Resistance: 30D support at $2,056.49, 200D resistance at $2,384.34

Technical indicators confirm a bearish bias for MELI. The stock is trading below its 30D, 100D, and 200D moving averages, with MACD and RSI signaling weakening momentum. Key support levels at $2,056 and $1,946 could dictate near-term direction. While the 52-week low of $1,646 offers a potential floor, the 200D MA at $2,273.62 remains a critical resistance level. Given the bearish setup, short-term traders may consider bearish options or ETFs.

Top Options Contracts:
• MELI20260918C2060 (Call Option)
- Strike Price: $2,060
- Expiration: 2026-09-18
- Delta: 0.010258 (deep out-of-the-money)
- Theta: -0.003085 (slow time decay)
- Gamma: 0.018967 (modest sensitivity)
- Implied Volatility: 0.08% (extremely low)
- Turnover: 0 (no liquidity)
- Leverage Ratio: 398,195% (speculative)
- Price Change Ratio: 0.00%
- Why it stands out: This call option offers extreme leverage but is nearly worthless due to its deep out-of-the-money status and zero turnover. A 5% downside scenario (to $1,896.39) would result in zero payoff, making it a high-risk, low-probability trade.

Hook-style trading opinion: Aggressive bears may consider shorting MELI into a breakdown below $1,946, but liquidity constraints in the options chain limit actionable opportunities. Watch for a test of the 52-week low as a potential catalyst.

Backtest Mercadolibre Stock Performance
The backtest of MELI's performance after a -4% intraday plunge from 2022 to now shows favorable results, with win rates and returns indicating the stock's resilience and potential for positive gains in the following days:

MELI at Pivotal Crossroads – Watch for Breakdown or Rebound
Mercadolibre’s 3.77% intraday decline reflects a critical juncture for the stock as credit risks and fintech competition converge. While the company’s long-term growth story in Latin America remains intact, near-term margin pressures and rising defaults could prolong the selloff. Investors should monitor the 200D MA at $2,273.62 as a key resistance level and the 52-week low of $1,646 as a potential floor. Amazon (AMZN), the sector leader, rose 1.74% today, highlighting divergent performance within the Internet Retail space. For now, a bearish bias is warranted, but a rebound above $2,056 could signal a short-term trading opportunity. Action: Watch for a breakdown below $1,946 or a surprise earnings beat to trigger a reversal.