Mercadolibre Plummets 3.7% Amid Sector Volatility and Strategic Uncertainty

Summary
• MELI trades at $1,997.10, down 3.73% from previous close of $2,074.48
• Intraday range spans $1,957.00 to $2,037.50
• Turnover hits 432,460 shares, 0.92% of average volume

Mercadolibre’s sharp intraday decline has ignited market speculation, with the stock trading below its 52-week low of $1,646. The move follows a partnership announcement with Agility Robotics and a recent earnings miss, while broader sector dynamics and macroeconomic uncertainty add layers of complexity. Traders are now dissecting technical indicators and options activity to gauge the next catalyst.

Strategic Uncertainty and Earnings Disappointment Weigh on MELI
The selloff stems from a confluence of factors: a Q3 earnings report that missed EPS estimates by $1.56, concerns over the scalability of its Agility Robotics partnership, and broader macroeconomic headwinds. The partnership, while innovative, has yet to demonstrate clear ROI, with Digit’s deployment limited to a single Texas facility. Meanwhile, the Fed’s impending rate decision looms over risk assets, amplifying volatility. Short-term traders are capitalizing on the breakdown below key support levels, while long-term investors remain cautious about the stock’s stretched valuation.

Internet Retail Sector Splits as Amazon Gains Ground
The Internet Retail sector is mixed, with Amazon (AMZN) up 1.54% as the sector leader. MELI’s decline contrasts with Amazon’s resilience, highlighting divergent investor sentiment. While Amazon benefits from holiday-driven demand and AI-driven logistics, MELI faces near-term execution risks. The sector’s 52-week high of $2,645.22 for MELI remains distant, underscoring the need for a catalyst to reignite momentum.

Bearish Setup and Options Playbook for MELI’s Volatile Outlook
• 200-day MA: $2,273.62 (well below current price)
• RSI: 51.30 (neutral, but bearish bias emerging)
• Bollinger Bands: Lower band at $1,946.24 (critical support ahead)

The technical picture suggests a short-term bearish bias, with the 200-day MA acting as a formidable hurdle. Traders should monitor the $1,957 intraday low as a potential pivot point. While leveraged ETFs are unavailable, options activity offers insight: the MELI20260109C2010 call option (strike $2,010, expiring Jan 9) and MELI20260123C2010 (Jan 23) are notable for their moderate delta and implied volatility. However, zero turnover and volume in these contracts limit liquidity, favoring a cautious approach. A 5% downside scenario (targeting $1,897.25) would yield a call option payoff of $0 (strike above current price) and a put payoff of $13.75 per contract. Aggressive bears may consider shorting MELI20260109C2010 if the $1,957 level breaks, but liquidity constraints remain a risk.

Backtest Mercadolibre Stock Performance
The backtest of MELI's performance after a -4% intraday plunge from 2022 to the present shows favorable short-to-medium-term gains. The 3-Day win rate is 52.32%, the 10-Day win rate is 54.78%, and the 30-Day win rate is 58.47%, indicating a higher probability of positive returns in the immediate aftermath of the plunge. The maximum return during the backtest period was 6.67%, which occurred on day 59, suggesting that MELI has the potential for recovery and even surpassing its pre-plunge levels.

Act Now: Position for MELI’s Critical Support Test
The immediate outlook hinges on whether MELI can hold above $1,957. A breakdown would validate the bearish case, while a rebound above the 200-day MA could reignite optimism. Investors should prioritize liquidity and focus on the $1,957–$2,010 range as a battleground. With Amazon (AMZN) up 1.54%, sector rotation could further pressure MELI. Watch for a decisive move below $1,957 or a reversal above $2,037.50 to define the next phase of this volatile trade.