MercadoLibre 101 and How It's Addressing Market Demand

Markets Motley Fool

MercadoLibre (NASDAQ: MELI) is sometimes called the Amazon of Latin America, and growth investors around the world are taking interest in its huge potential.

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In this Industry Focus: Tech segment, Motley Fool analyst Dylan Lewis and contributor Danny Vena explain what MercadoLibre is and how the company is responding to the needs of its customers with MercadoPago and Mercado Envios.

A full transcript follows the video.

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This video was recorded on June 23, 2017.

Dylan Lewis: I think this is a company that a lot of Fools might know already. It's one that you followed for quite some time with board posts and as a fool.com writer as well. It's a recommendation in many of our premium services. But for those who don't know Mercado, why don't we run through what they do and how they make money?

Danny Vena: OK. MercadoLibre has been described alternately as the eBay or the Amazon of Latin America. They started out very similar to what eBay was a decade or more ago. They connect buyers and sellers in a variety of different ways, and they take a cut of each transaction. They've evolved and they have fixed-price goods on their website, similar to Amazon.com. They also do online classified ads like you might find on Craigslist. They sell cars, boats, airplanes, like AutoTrader. If you are of a mind, you can list your house for sale on their website.

Dylan Lewis: Beyond all of those e-commerce things, they've also started to move into the payments space as well, right?

Danny Vena: They have. There's actually two areas that are pretty stunning growth areas for them. One is, they have a service called MercadoPago, which is their payment solution, similar to what PayPal does. They also have a service called MercadoEnvíos, which connects Latin American consumers with reliable shipping. We tend to take shipping for granted because it's so easy here and so prolific. But in Latin America, shipping was something that would keep consumers from purchasing goods online, because it was just not reliable. So MercadoLibre has used their volume and their buying power to set up shipping, and there is a go-between to make sure that things that consumers buy get there.

Danny Vena owns shares of AMZN, MercadoLibre, and PYPL. Danny Vena has the following options: long January 2019 $18 calls on eBay and short October 2017 $34 calls on eBay. Dylan Lewis owns shares of AMZN and MercadoLibre. The Motley Fool owns shares of and recommends AMZN, eBay, MercadoLibre, and PYPL. The Motley Fool has a disclosure policy.