MercadoLibre (MELI) reported a net revenue of $6.79 billion for Q2 2025, a 34% increase year-over-year, but its operating margin contracted by 210 basis points to 12.2%. The adjusted EPS of $10.31 fell short of the Zacks Consensus estimate by 14.15%, primarily due to high expenses from investments in free shipping and marketing, which totaled approximately $2.3 billion, rising 38.4% year-over-year.
With the Zacks Consensus Estimate for 2025 earnings at $44.63 per share—down $3.12 in the last 30 days—MercadoLibre faces intensifying competition from firms like Nubank, Amazon, and Shopee. Consequently, MELI shares have dropped 10% over the past three months, underperforming other sector players, while the company’s forward P/E ratio stands at 39.84, significantly above the industry average of 24.67.
Investor concerns are mounting due to regional instability, currency volatility, and the company’s strategy favoring rapid expansion over profitability, which has contributed to its Zacks Rank #4 (Sell). Analysts advise investors to reassess their positions in light of these challenges.
