Mercadolibre Plummets 6.45%: What's Behind the Sudden Selloff?

Summary
• Mercadolibre (MELI) tumbles 6.45% intraday to $1,943.05, its lowest since 2023
• Raiffeisen Bank slashes stake by 81.5%, while institutional ownership hits 87.62%
• Q3 EPS misses estimates by $1.56, but revenue surges 39.5% to $7.41B
• Analysts maintain 'Moderate Buy' rating despite price target cuts to $2,854.71

Today’s selloff in Mercadolibre has sent shockwaves through the e-commerce sector, with the stock trading nearly 6.5% below its opening price of $2,105.30. The sharp decline follows a mixed earnings report, a major institutional stake reduction, and a new mixed shelf filing that has sparked investor caution. With the stock now testing key support levels, traders are scrambling to decipher whether this is a short-term correction or a deeper shift in sentiment.

Earnings Miss and Institutional Exodus Trigger Panic
Mercadolibre’s 6.45% intraday drop stems from a confluence of bearish catalysts. The company reported Q3 EPS of $8.32, missing estimates by $1.56, while Raiffeisen Bank’s 81.5% stake reduction signaled institutional skepticism. The mixed shelf filing—allowing MELI to raise capital via debt, equity, or warrants—has further muddied the narrative, as investors weigh whether the move signals aggressive growth bets or margin compression risks. Compounding these issues, the stock’s 52-week high of $2,645.22 now looms as a distant memory, with the 200-day MA at $2,275.28 acting as a psychological barrier.

Internet Retail Sector Volatility Amid E-Commerce Uncertainty
The broader Internet Retail sector mirrored MELI’s decline, with Amazon (AMZN) down 1.39% and peers like eBay (-1.8%) and Shopify (-2.4%) underperforming. However, MELI’s selloff was amplified by its unique margin pressures from Brazil expansion and the Raiffeisen stake reduction. While Amazon’s earnings beat provided some sector stability, MELI’s 50.3x P/E ratio remains a premium to the sector’s 19.2x average, highlighting its vulnerability to earnings revisions.

Bearish Setup: Key Levels and High-Leverage Options to Watch
• 200-day MA: $2,275.28 (below current price)
• RSI: 14.5 (oversold territory)
• MACD: -49.94 (bearish divergence)
• Bollinger Bands: Lower band at $1,951.13 (near current price)

The technicals paint a bearish near-term picture, with MELI trading below its 30D, 100D, and 200D moving averages. The RSI at 14.5 suggests oversold conditions, but the MACD histogram’s -11.44 and negative trend indicate momentum is still deteriorating. Traders should monitor the $1,951.13 lower Bollinger Band as a potential short-term floor. For options, two contracts stand out:

• MELI20251128C1945
- Type: Call
- Strike: $1,945
- Expiry: 2025-11-28
- IV: 0.51% (low volatility)
- Delta: 0.009551 (near at-the-money)
- Theta: -0.087186 (high time decay)
- Gamma: 0.016488 (moderate sensitivity)
- Turnover: 0 (low liquidity)
- Leverage Ratio: 387,875.40% (extreme)
- Payoff at 5% Downside: $0.00 (strike price matches current price)
- Why it stands out: The extreme leverage ratio makes this contract hyper-sensitive to minor price swings, though low turnover and IV suggest it’s a speculative bet for aggressive traders.

• MELI20260220C1960
- Type: Call
- Strike: $1,960
- Expiry: 2026-02-20
- IV: 0.01% (extremely low)
- Delta: 0.115658 (moderate)
- Theta: -0.099701 (high time decay)
- Gamma: 2.200178 (exceptional sensitivity)
- Turnover: 0 (no liquidity)
- Leverage Ratio: 387,875.40% (extreme)
- Payoff at 5% Downside: $0.00 (strike price above current price)
- Why it stands out: The gamma of 2.20 suggests this option could react violently to price changes, but the lack of turnover and near-zero IV make it a high-risk, low-liquidity play.

Action Insight: Aggressive bears may consider shorting MELI20251128C1945 if the $1,945 level breaks, but liquidity constraints make this a high-risk trade. For a safer approach, watch the $1,951.13 Bollinger Band for a potential rebound into oversold RSI territory.

Backtest Mercadolibre Stock Performance
Below is a concise interpretation of the event-study back-test together with an interactive visual module for your further exploration.Key take-aways • 33 separate –6 % (or larger) intraday plunges have occurred in MELI since 2022. • On average the stock recovered modestly: a median +0.4 % after one day and about +4.5 % after 30 trading days—both statistically insignificant versus the benchmark, indicating only a slight, noisy rebound pattern. • Win-rate drifts around 50–65 % during most of the first month, but without strong statistical confidence. • No clear “buy-the-dip” edge is evident; position sizing and risk limits would be essential if one were to trade this pattern.Assumptions & auto-filled items 1. Price series: daily close (default) drawn from 2022-01-01 to 2025-11-20. 2. Event definition: any day whose intraday % change ≤ –6 % (based on high-low vs. prior close). 3. Back-test horizon: 30 trading days post-event (engine default). 4. Benchmark: MELI’s own price path (buy-and-hold) over the same window.Feel free to inspect the full distribution of returns, cumulative curves and per-event paths via the module:Please open/expand the module to interact with the charts and tables. Let me know if you’d like deeper cuts (e.g., sub-periods, alternative thresholds, or adding stop-loss/hold-days constraints).

Critical Crossroads: Will MELI Rebound or Break Below $1,900?
Mercadolibre’s selloff has created a pivotal inflection point. The stock’s ability to hold the $1,951.13 lower Bollinger Band will determine whether this is a short-term correction or a deeper bearish trend. With the 200-day MA at $2,275.28 acting as a distant target, traders should monitor the $1,900 level as a critical support zone. Meanwhile, the sector leader Amazon (AMZN) down 1.39% highlights broader e-commerce fragility. Investors should prioritize liquidity and avoid over-leveraged options like MELI20251128C1945 unless volatility picks up. Watch for a breakdown below $1,900 or a rebound above $2,105.30 to dictate next steps.