MercadoLibre Stock Drops 5.88% on Earnings Miss

MercadoLibre's stock price dropped 5.88% 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 a potential squeeze on margins.

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, increasing by 33.8% year-over-year 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.

Investors are closely monitoring key metrics such as gross merchandise volume and total payment volume, which are crucial indicators of the company's financial health. MercadoLibre's gross merchandise volume for the quarter was $15.26 billion, slightly above the four-analyst average estimate of $14.9 billion. The 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, increasing by 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%.