MercadoLibre stocks skyrocket after destruction of profit outlook

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MercadoLibre

Stocks jumped more than 18% after the company surpassed Wall Street's earnings guidance and exceeded the revenue consensus.

The story back. The actions of the Buenos Aires-based company, often called the
eBay

(EBAY) in Latin America, were already up about 65% this year before MercadoLibre announced its first quarter results, compared to 17% for the S & P 500 in 2019.

It's partly because
PayPal Holdings

(PYPL) made a big bet on the company in March, with a surprise investment of $ 750 million as part of a $ 1.85 billion capital increase by MercadoLibre. This vote of confidence has given MercadoLibre "a powerful and unexpected ally," said Marvin Fong of BTIG.

What's up. Now, it seems that the strength of PayPal was justified. MercadoLibre earned 13 cents per share in the first quarter for a turnover of $ 473 million. This overturned Wall Street's expectations of a loss of 13 cents per share on a $ 421 million turnover, according to Bloomberg.

The results of the business payment unit, which manages the MercadoPago service, were particularly impressive, Susquehannaof the James Friedman written in a note to customers. "It's a single payment asset with almost three-digit growth," he said. "This makes MercadoPago one of the most valuable means of payment in the world."

Noting that the strength of MercadoLibre's payments is not solely related to the company's e-commerce business, Friedman pointed out that about 50% of payments came from outside his market.

The MercadoLibre stock (symbol: MELI) rose 18.6% Friday, to $ 572.11 per share.

Go from the front. Friedman thinks the company will focus on increasing revenue on its buying platform by deploying free shipping to more customers, which could help attract customers at the expense of margins.

Write to Ben Walsh at [email protected]