We refer to our team as pilots because we take the responsibility of transporting our investors, determining the safest routes, analysing plans and carefully calculating navigation and direction. In our journey to constantly find investment solutions to meet the specified investment goals for each investor, we direct our GPS toward MercadoLibre.

MercadoLibre is the largest e-commerce marketplace and payment platform in Latin America, essential role in return for the Autus Global Equity Fund.

MercadoLibre operates in 18 countries in Latin America and its most significant revenue contributors being Brazil, Argentina, and Mexico. At the end of June 2021, these countries contributed to over 90% of the total revenue across the different business segments. The segments include their e-commerce platform called Marketplace, logistics services, advertising and FinTech.

MercadoLibre’s primary income-generating segment is its e-commerce platform. Most of the inventory is 3rd party owned, and it operates as an online marketplace where users list their products to be sold in these 18 countries.

MercadoLibre’s FinTech leg, MercadoPago, provides payment and money transfer solutions to buyers and sellers and is its second-largest earning stream. It not only allows users and businesses to send and receive payments, but users can also invest directly into their Pago accounts. As part of MercadoPago, MercadoLibre also provides credit and short-term loans for both merchants and consumers.

Other than these two core services, MercadoLibre also offers

– MercadoEnvios – its logistic partner for fulfilment services.

– MercadoShops – that allows sellers to set up and maintain a storefront

– Advertisement services through MercadoLibre Publications.

With the introduction of MercadoLibre as an investment opportunity for Autus Fund Managers, we will focus on MercadoLibre’s primary source of earnings. As of now, MercadoLibre earns most of its revenue from its e-commerce services. Looking at its high revenue growth rates, it is clear that the company is in the early growth stage and has only recently started making a profit. We believe that MercadoLibre will focus on making its business work during the early growth stage instead of making a profit. A similar growth strategy to that of Amazon.


If you look at the Gross Merchant Volume (GMV) and the growth chart of items sold, the company has had very consistent growth in the past years. Because MercadoLibre earns a commission on every item sold in the Marketplace, GMV growth and items sold growth is essential. Therefore, as long as these metrics continue to increase, we may expect the company’s revenue to increase significantly in the future.

The business has benefited tremendously from the COVID-19 pandemic since consumers opted for online retail rather than big shopping centres.

According to statistics, we’re expecting that the e-commerce share of retail sales in Latin America is still on the rise. Compared to countries like the United Kingdom and the United States, where e-commerce sales are already at 28% and 18% of all retail sales, the growth potential for e-commerce sales in Latin America is still high. We believe that even after the Covid-19 pandemic stabilises, consumers will continue to move their purchases online.

Competitive Advantage

MercadoLibre is the largest e-commerce online retailer in Latin America, far ahead of its two closes competitors, Amazon and Americanas.

As an added advantage, MercadoLibre also offers free shipment to its buyers.


The second-largest segment for MercadoLibre is its Fintech segment, with more than 30% of revenue attributed to this segment, the Total Payment Volume (TPV), and the transaction number was increasing steadily with a significant spike in online sales in 2020 following the pandemic and the subsequent use of the MercadoPago payment platform. The payment platform is well integrated with the MercadoLibre Marketplace and offers consumers repayment options better suited to their needs. MercadoLibre management is planning to intergrade the MercadoPago segment into a financial services platform that will include transactional accounts, asset management, long-term and short-term loans, as well as insurance.

Risks for MercadoLibre

There are many uncertainties out of MercadoLibre’s control in Latin America. These risks include political, geographic, inflation, and foreign exchange rate risks.

MercadoLibre’s revenue and earnings are generated in their local currency; however, they report in US dollars. This increases the exchange rate risk for the company. Combined with the high inflation in Latin America, the currency could lose value if the inflation rate rises further.

Latin America and the Caribbean:  Inflation rate from 2011 to 2021 (compared to the previous year)

MercadoLibre second big risk area is their debt book. Although their interest expenses have decreased below their revenue, it is still very high compared to operating income. Should the interest rates increase, the interest repayments may place an additional burden on MercadoLibre’s operational ability.

The third risk to consider is competition in Latin America. The biggest competitor is Amazon. MercadoLibre is already well established in Latin America, but this may become a risk if Amazon increases its market share significantly.

We are excited to have seen the company’s growth over the past few years. We are looking forward to seeing how MercadoLibre ramps up to compete with the Global names.