MercadoLibre

MercadoLibre combines multiple moat sources: two‑sided network effects in its marketplace and acquiring networks; cost advantages from a purpose‑built, high‑throughput logistics network that delivers most parcels in under 48 hours in key markets; data scale that improves ad targeting, search relevance and fraud/underwriting; and efficient scale in LatAm where replicating its end‑to‑end stack is economically daunting.

Ads is becoming a third profit engine, aided by Google Ad Manager integration that extends reach beyond its own apps. Headwinds that could erode the moat include aggressive promotions by global challengers, regulatory scrutiny of platform and fintech practices, and potential capex arms races.

Netting these factors, we view MELI’s moat as wide and strengthening with use.

Pricing power is mixed across the portfolio: take‑rates in marketplace and acquiring are defendable due to ecosystem benefits and embedded services; retail media monetization is rising (ads penetration reached ~2.1% of GMV in Q4’24 with room to expand); deposit yields help attract and retain fintech balances.

Offsetting this, the company deliberately lowered free‑shipping thresholds in Brazil (R$79 to R$19) to drive engagement, which near‑term compresses margins. Over time, scale efficiencies and ads should support blended monetization. We score solid but not unconstrained pricing power.

The business exhibits recurring usage across commerce, payments and credit with multi‑year share gains in core geographies.

TTM revenue rose to roughly 24.1 billion dollars with TTM EBIT margins ~12%, and both commerce and fintech delivered strong FX‑neutral growth in H1’25. Predictability is moderated by LatAm macro/FX swings (notably Argentina), regulatory developments and the credit cycle as the card portfolio scales.

Still, the toll‑like features of acquiring, ads and logistics and MELI’s multi‑country footprint improve overall durability.

MELI’s corporate liquidity and access to capital are strong, supported by investment‑grade ratings and growing profitability. At Q2’25, the company reported net debt of about 3.83 billion dollars including leases, with available cash and investments of roughly 5.15 billion and robust operating cash flow.

Note that fintech customer funds and funding lines complicate simple leverage views; management treats fintech funding as working capital in its adjusted FCF construct. Overall, we see ample capacity to invest through cycles, with prudent risk management required as the loan book expands.

Capital allocation has prioritized organic reinvestment into logistics, fintech stack, credit and retail media, aligned with long‑run moat widening. The company has announced record investment plans in Brazil and Mexico for 2025, remains disciplined on M&A, and uses buybacks sparingly.

Loan growth is increasingly funded with external facilities, and credit card cohorts are progressing toward profitability. We view the bias toward high‑return reinvestment as appropriate, with ongoing vigilance on credit provisioning and cohort economics.

Founder influence remains central. A planned transition will see founder Marcos Galperin become Executive Chairman and Ariel Szarfsztejn CEO on January 1, 2026, preserving continuity. Operational cadence, transparency and long‑term orientation have been consistent across cycles.

We also note robust disclosures via detailed shareholder letters and the steady broadening of the leadership bench.