MercadoLibre Share Price Forecast April 2022 – Time to Buy MELI?
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Shares of online marketplace MercadoLibre (NASDAQ: MELI) are in the green today, after closing at $1265.01 as of April 4th (19:59 EDT). MercadoLibre shares plummetted to their lowest levels in nearly two years this February. The shares rebounded more than 40% subsequently, but are still nearly 40% below their 52-week high.
MercadoLibre – Technical Analysis
MercadoLibre’s financial statement indicates a market cap of $63.781 billion with total assets worth $10.101 billion. Revenue for 2021 was at $7.07 billion with a profit margin of 1.18% compared to $3.97 billion in 2020. In the decade between 2011 to 2021, MercadoLibre’s annual revenue increased at a CAGR of 37.2% to $7.07 billion. This has led MercadoLibre shares to increase by 1160% over the same period.
Moving averages such as Exponential Moving Average (10)(1203.92), Simple Moving Average (10)(1220.04), Exponential Moving Average (20) (1158.38), Simple Moving Average (20)(1116.11) and Exponential Moving Average (30)(1135.42) are indicating a buy action. Oscillators such as Relative Strength Index (14)(60.68), Stochastic %K (14, 3, 3)(88.33), Commodity Channel Index (20)(83.45), Average Directional Index (14)(20.76) and Awesome Oscillator(142.88) are neutral.
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Recent Developments
MercadoLibre was founded in 1999 and operates in 18 Latin American countries. It established a first-mover’s advantage in Latin America with the support of major investors such as eBay. It has now become the leader in aspects such as unique visitors and pageviews across all of its major markets, generating most of its revenue in Mexico, Argentina and Brazil. MercadoLibre beat its competitors by developing a diversified logistics network with features such as drop shipping, cross-docking, flex, and first-party fulfilment options.
The company expanded into Córdoba, Argentina with its new software centre, then subsequently opened a Colombian office in Bogotá in October 2016. It opened its first distribution centres in nations such as Argentina, Brazil and Mexico in 2019 and in Chile and Columbia in 2020. In March 2021. MercaoLibre invested $1.8 billion in Brazil. The company also runs a real estate and motors division under the name Mercado Libre Classificados, where realtors pay a monthly fee to list properties and automobiles.
MercadoLibre had 300 million live listings on its e-commerce platform according to its Q4 report. It is an increase of 275 million from the last Q4. Sales from official stores represented over 23% of its GMV in Q4. It is now able to handle bulky items such as home appliances and furniture.
The company has now become a leader in e-commerce across Latin America. It fended off formidable overseas challengers such as Amazon by taking advantage of rising internet penetration rates and income levels across the region. MercadoLibre launched Mercado Pago, a digital payments platform in 2003. It thus presents a smart long-term investment in South America’s growing fintech market.
Should You Buy MELI Shares?
Several factors such as inflation, rising interest rates, and other macro and geopolitical shocks have crushed growth stocks over the past four months. MercadoLibre shares are currently trading at six times sales. This is very reasonable relative to the 3% growth expected by analysts. While the shares traded at much higher levels last year, they were torpedoed by concerns about a post-lockdown slowdown and the broader downturn in high-growth tech stocks.
However, the market seems to be neglecting the company’s long-term strengths. Judging by its market cap, MercadoLibre has plenty of upside potential and should remain a top holding for growth-oriented investors. Based on this, now is a good time to buy MELI shares.
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