MercadoLibre Stock Drops 5.67% on Earnings Miss

MercadoLibre's stock price dropped 5.67% in pre-market trading on August 5, 2025, reflecting investor concerns over the company's recent financial performance.

MercadoLibre reported a 1.5% decline in net income to $523 million in the second quarter, missing analysts' average estimate of $596 million. This decline in profitability, despite strong revenue growth, has raised questions about the company's operational efficiency and cost management.

The company's earnings before interest and taxes (EBIT) reached a record high of $825 million, but fell short of the $869 million forecast. The EBIT margin stood at 12.2%, down from previous quarters, indicating potential challenges in maintaining profitability amidst increasing operational costs.

MercadoLibre's quarterly earnings of $10.31 per share missed the consensus estimate of $12.01 per share, further contributing to the stock's decline. The company's revenue, however, showed impressive growth, with a year-on-year increase of 33.8% to $6.79 billion, exceeding Wall Street's estimates by 3.9%.

Despite the strong top-line growth, the company's net income fell to $523 million, missing the consensus estimate of $614.7 million. This discrepancy highlights the challenges MercadoLibre faces in translating revenue growth into profitability.

Operating income was reported at $825 million, compared to the consensus estimate of $870 million. The company's gross merchandise volume reached $15.26 billion, slightly above the four-analyst average estimate of $14.9 billion. Total payment volume was $64.6 billion, also exceeding the three-analyst average estimate of $64.01 billion.

Geographically, MercadoLibre's revenue in Mexico and Argentina showed significant year-over-year growth, with increases of 25.4% and 76.9% respectively. However, revenue in Brazil, the company's largest market, grew by 24.7%, slightly below the estimated 25.1%.