Nearly 15 years into its record as a publicly traded company, MercadoLibre (NASDAQ: MELI) continues to reward long-term investors. Shares of “Latin America’s Amazon” are up 160% in the last year alone, and now trade 8,900% higher than its 2007 IPO price of $18 per share.
Still, there are reasons to believe caution is warranted. MercadoLibre shares are expensive by traditional valuation metrics on account of its explosive stock appreciation, and the company now trades at 25 times sales. At the same time, it is expected the company’s top-line growth will slow from nearly 70% in 2020 to slightly under 40% for 2021 as the hopefully soon-to-be post-pandemic world transitions back to traditional brick-and-mortar retail. Oh, did I forget to mention the company now faces increased competition from Amazon?
Despite all these headwinds, MercadoLibre remains a buy. Here’s why.