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PayPal Holdings (PYPL) plans to hold a stake in MercadoLibre (MELI) as part of its $ 1.8 billion equity offering. MercadoLibre shares fell on Tuesday as PayPal shares rose slightly.
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Equity investment comes as MercadoLibre faces increased competition Amazon.com (AMZN) in Brazil, its largest market. In this agreement, PayPal invests 750 million dollars in MercadoLibre, a company based in Argentina.
At the same time, the growing ecosystem of Amazon payments represents a long-term threat to PayPal, analysts said.
"Digital commerce in Latin America is growing phenomenally and MercadoLibre is well positioned to maintain its leadership," PayPal chief executive Dan Schulman said in a press release.
MercadoLibre Stock slips from the highest historical
The stock of PayPal's e-commerce company remains close to its highest level before the stock offering. MercadoLibre shares slid 0.2% to 480.23 today. The PayPal stock rose slightly to 97.61. PayPal shares rose nearly 21% from a year ago.
On March 8, Susquehanna Financial Group downgraded the title of MercadoLibre down, fearing that Amazon is planning big efforts in Brazil. Amazon has acquired storage space in Brazil, said Susquehanna.
PayPal stock in IBD 50
In addition, Dragoneer Investment Group plans to invest $ 100 million in MercadoLibre.
PayPal's stock ranks 19th among the growing companies in the DBI 50.
PagSeguro Digital (PAGS), a payment processing center based in Brazil, ranks 16th in the 50th IBD. In February, the payment processing center reported better results in the first quarter.
The action PagSeguro took off after its IPO in January 2018. However, the action PagSeguro has subsequently retreated in the face of disappointing results and a new offering of shares.
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