MercadoLibre (MELI) Stock: Big Institutional Money Is Still Buying — Should You?

TLDR

• Capital Research Global Investors raised its MELI stake by 22.5% in Q4, adding 408,939 units to reach 2,225,031, valued at ~$4.48 billion.
• Institutional investors and hedge funds now control 87.62% of MercadoLibre’s stock.
• Q1 revenue jumped 49% year over year to $8.85 billion, beating estimates, but EPS of $8.23 missed the $8.75 consensus.
• Director Alejandro Nicolas Aguzin bought 600 units at $1,655.93 each in May, a 12.62% increase in his personal position.
• Analyst consensus sits at Moderate Buy with an average price target of $2,255.33, though several firms cut their targets following earnings.

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MercadoLibre (MELI) stock opened at $1,607.80 on Friday, down 1.7%, sitting well below its 52-week high of $2,645.22. The 50-day moving average is $1,720.81 and the 200-day sits at $1,887.84, both above the current price.

MercadoLibre, Inc., MELI

Capital Research Global Investors was the headline mover on the institutional side. The firm increased its MELI position by 22.5% in Q4, picking up 408,939 additional units to bring its total to 2,225,031, worth roughly $4.48 billion. That makes MELI the firm’s 24th largest holding, representing 0.8% of its portfolio.

A handful of other institutional names also added to their positions during the quarter. Hardy Reed, Rothschild Investment, Interchange Capital Partners, Cornerstone Select Advisors, and Mitchell Capital Management all made modest increases. Taken together, hedge funds and institutions now own 87.62% of the company.

On the insider front, Director Alejandro Nicolas Aguzin bought 600 units on May 22nd at an average price of $1,655.93, spending roughly $994,000. That lifted his total holding to 5,355 units, valued at just over $8.8 million.

Q1 Earnings: Revenue Beats, EPS Misses

MercadoLibre reported first-quarter results on May 7th. Revenue came in at $8.85 billion, up 49% year over year and ahead of the $8.29 billion analyst estimate. That’s a strong top-line number.

EPS, however, told a different story. The company posted $8.23, missing the $8.75 consensus by $0.52. A year ago, the same quarter produced $9.74 EPS — a year-over-year decline that caught some attention.

Return on equity stands at 29.58% and net margin is 6.04%. Analysts currently expect full-year EPS of $40.97. The company’s PE ratio sits at 42.43, with a PEG of 0.99.

Analyst Price Targets Trimmed

The earnings miss prompted a round of target cuts, though most analysts kept constructive ratings.

JPMorgan lowered its target from $2,100 to $1,900 and held a neutral rating. UBS dropped from $2,050 to $1,750, also neutral. Morgan Stanley cut from $2,600 to $2,450 but kept its overweight rating. Goldman Sachs set a $2,100 target. Daiwa moved from buy to hold with a $1,800 target.

Of 18 analysts covering the stock, one rates it Strong Buy, eleven say Buy, five say Hold, and one has a Sell. The consensus average target is $2,255.33 — roughly 40% above where MELI trades today.

MercadoLibre has a market cap of $81.52 billion, a current ratio of 1.16, and a debt-to-equity ratio of 0.63. The one-year low is $1,495.00.