Mercadolibre Slides to 141st in Trading Volume Amid Shrinking Margins and Intensifying Rivalry

On August 14, 2025, Mercadolibre (MELI) closed with a 0.32% decline, trading a volume of $0.67 billion, ranking 141st in market activity. The stock has underperformed its peers amid intensifying sector challenges.

Recent earnings reports highlight Mercadolibre’s shrinking operating margins, which fell 210 basis points year-over-year to 12.2% in Q2 2025. Despite a 34% year-on-year revenue increase to $6.79 billion, aggressive investments in free shipping and marketing—particularly in Brazil—have strained profitability. Operating expenses surged 38.4% to $2.3 billion, reflecting a strategic prioritization of market share over near-term earnings.

Competitive pressures further complicate the outlook. Fintech rival Nubank and e-commerce players like Amazon and Shopee have intensified their presence in Latin America, compelling Mercadolibre to maintain elevated spending on promotions and logistics. This has led to sustained margin compression across core business lines. Meanwhile, macroeconomic headwinds, including currency volatility in Argentina and political uncertainty across the region, have dampened investor sentiment.

Valuation metrics underscore the stock’s premium pricing. Mercadolibre trades at a forward 12-month P/E ratio of 39.84x, significantly higher than the Zacks Internet-Commerce industry average of 24.67x and peers like Amazon (31.05x) and Nubank (17.79x). A recent 10% three-month price decline has widened the gap between its market dominance narrative and operational realities, prompting analysts to question its capital allocation efficiency.

The strategy of buying the top 500 stocks by daily trading volume and holding them for one day from 2022 to 2025 yielded a CAGR of 6.98% but faced a maximum drawdown of 15.59%. The mid-2023 downturn underscores the risks of volume-driven strategies in volatile markets.