The global B2C eCommerce market, already worth an estimated $4.1 trillion this year, is expected to hit $6.4 trillion by 2027 – a respectable 11.5% annual growth rate.
However, this growth will be decidedly unequal. Latin America is the global leader in ecommerce growth with its market expected to grow by 19% over the same time period – substantially above the global average. With a young population and low penetration rates, this is a region with a lot of potential.
In short, while many investors might feel eCommerce has pulled back since the heights of the pandemic, there is still plenty of opportunity in other markets.
And today’s stock pick is an eCommerce company that is dominating the Latin American region, riding from strength to strength, and whose stock has impressed analysts all throughout 2023.
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MercadoLibre, Inc. (MELI)
MELI is known as the Amazon of Latin America – and for good reason. Almost half of all ecommerce users in Latin America are on its platform, and it is by far the most visited online marketplace in the region.
Its top line revenue numbers are a testament to its growth. From $2.3 billion for FY 2019, the company’s revenue has shot up to $10.5 billion for FY 2022. It has also expanded its offerings to include financial services, creating its own payment platform that has become a dominant product in its own right ($124 billion in total payment volume for FY 2022 – a 60% yearly increase).
While its stock has been on a run in 2023, having increased by over 50% this year – there still looks to be plenty of runway remaining.
For one, the stock is only trading at around 6x sales – while it used to trade around 8x sales on the low end from 2013 to 2016.
And second, when you compare the company’s merchandise and payment volumes to giants like Amazon and PayPal – you will see that there’s still a lot of untapped potential in the Latin American market.
To your wealth,
Felix @ Ace of Investing