Amazon (AMZN) is About to Eat MercadoLibre's (MELI) Lunch in LatAm - Barron's
Tweet
Share
E-mail
Get Alerts MELI Hot Sheet
Join SI Premium – FREE
MercadoLibre (Nasdaq: MELI) shares are lower Tuesday after starting out the session in positive territory as Barron's warned the best might be over for the LatAm e-Commerce giant.
Barron's primary reason for the call is a company called Amazon.com (Nasdaq: AMZN).
That's not to say Barron's completely rips apart MercadoLibre's chances; it noted how shares have risen steadily from an IPO price of $18 in 2007 to a close of $74.73 last Friday. The level puts it at a $3.3 billion market cap, which is 10 times trailing revs and 43 times trailing earnings. In addition, gross value sales for MercadoLibre rose 41 percent in 2011 to $4.8 billion with total revenue increasing 38 percent to $300 million.
MercadoLibre has also invested in technology, helping it to push past the competition in the growing Latin America market.
However, the arrival of Amazon will change the dynamics for MercadoLibre in its home market. Amazon is already seeing a strong response on its Brazilian site without even having a firm physical presence in the country.
Along with the best technology on the planet, Amazon is generating gobs more cash than MercadoLibre: about $2 billion in 2011 versus $70 million for MercadoLibre. Lots of cash opens up lots of opportunities, whether you're an incumbent or not.
Though nothing from Amazon has been explicitly said, job postings on the company's website indicate further expansion into Sao Paulo with emphasis on cloud-computing web services. Notably, MercadoLibre draws about half its top-line from Brazil.
Barron's made one final observation: MercadoLibre CEO Marcos Galperin sold about 15 percent of his holdings three months ago, amounting to about $74 million.
Shares of MercadoLibre are down 0.3 percent while Amazon shares are 0.2 percent better on the session.
Barron's primary reason for the call is a company called Amazon.com (Nasdaq: AMZN).
That's not to say Barron's completely rips apart MercadoLibre's chances; it noted how shares have risen steadily from an IPO price of $18 in 2007 to a close of $74.73 last Friday. The level puts it at a $3.3 billion market cap, which is 10 times trailing revs and 43 times trailing earnings. In addition, gross value sales for MercadoLibre rose 41 percent in 2011 to $4.8 billion with total revenue increasing 38 percent to $300 million.
MercadoLibre has also invested in technology, helping it to push past the competition in the growing Latin America market.
However, the arrival of Amazon will change the dynamics for MercadoLibre in its home market. Amazon is already seeing a strong response on its Brazilian site without even having a firm physical presence in the country.
Along with the best technology on the planet, Amazon is generating gobs more cash than MercadoLibre: about $2 billion in 2011 versus $70 million for MercadoLibre. Lots of cash opens up lots of opportunities, whether you're an incumbent or not.
Though nothing from Amazon has been explicitly said, job postings on the company's website indicate further expansion into Sao Paulo with emphasis on cloud-computing web services. Notably, MercadoLibre draws about half its top-line from Brazil.
Barron's made one final observation: MercadoLibre CEO Marcos Galperin sold about 15 percent of his holdings three months ago, amounting to about $74 million.
Shares of MercadoLibre are down 0.3 percent while Amazon shares are 0.2 percent better on the session.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Walmart (WMT) PT Lowered to $130 at UBS on Investment Narrative's Competing Dynamics
- S&P 500 may pull back before midterms, but Citi says buy the dip
- CoStar Group acquires Zonda for $800M, adding new home data
Create E-mail Alert Related Categories
Insiders' BlogRelated Entities
Barron's, EarningsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
