MercadoLibre Assuages Amazon Fears

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Latin American giant MercadoLibre (NASDAQ: MELI) has done an amazing job of developing an impressive infrastructure of e-commerce offerings. Thanks to the company's marketplace, payment, shipping, finance, and other services, consumers across most of the Western Hemisphere can enjoy the same benefits of e-commerce that U.S. consumers have had for a while. Yet some investors had recently feared that competition from U.S. e-commerce king Amazon.com (NASDAQ: AMZN) could threaten MercadoLibre's leadership position in Latin America.

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Coming into Thursday's third-quarter financial report, MercadoLibre investors wanted reassurance that their fears were overblown. MercadoLibre's strong growth supported optimism on that front, and shareholders seemed relieved that the company's first-mover advantages are still very much intact. Let's look more closely at MercadoLibre and its latest numbers to see what people are thinking about the company.

MercadoLibre keeps gaining ground

MercadoLibre's third-quarter numbers were mixed, but generally solid in investors' eyes. Revenue jumped more than 60%, to $370.7 million, which far eclipsed the consensus forecast for $348 million on the top line. Net income was once again down from the year-earlier period, dropping by 29%, to $27.7 million, but earnings of $0.63 per share was slightly better than the $0.62 per share that those following the stock were anticipating.

MercadoLibre's fundamental business performance was robust. Gross merchandise volume jumped by more than half, to $3.08 billion, while items sold soared by 56%, to 74.2 million. Registered user counts were up by almost 35 million from 12 months ago, climbing to 201.2 million. Growth in unique buyers accelerated to more than 30%, reaching 16.3 million, as MercadoLibre cited Brazil and Mexico as being especially important in promoting growth, but the Colombia and Chile markets also saw good gains both sequentially and year over year.

Payment growth continued to support MercadoPago. Total payment volume was up by nearly three-quarters, to $3.67 billion, with the volume of payments on MercadoLibre's marketplace making up nearly $2.6 billion of that total. Payment-transaction counts soared by almost 70%, to 62.3 million; payment service continued to see success.

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The shipping service MercadoEnvios remained strong, as well. Items shipped jumped 80%, to 41.7 million, with Mexico seeing unit shipment volume almost quadruple from 12 months ago. MercadoLibre is now shipping more than 55% of its marketplace sales through MercadoEnvios, demonstrating the value of the overall platform.

CFO Pedro Arnt described what the company has become to its users. "MercadoLibre is now positioned more clearly than ever," Arnt said, "as one of the central engines of the digital revolution of the retail and fintech landscape in Latin America." The CFO believes that the company has excelled at meeting the tough, but fair, strategic goals it has set.

What's ahead for MercadoLibre?

MercadoLibre won't settle for anything less than complete dominance of its market. As Arnt put it, "Our aspirations are clear: We will strive to become the preferred platform for our users facilitating their digital commerce, payments, and credit activities."

Fears about Amazon's potential impact if it chooses to enter the Latin American market more aggressively are justifiable, but at least for now, any threat doesn't appear to be imminent. Currently, Amazon sells books and has a marketplace covering Brazil, but it hasn't seemed to be a major priority for the U.S. e-commerce giant. That's no promise that Amazon's eyes won't turn southward at some point, but with a host of other growth initiatives in place, facing off against MercadoLibre isn't necessarily Amazon's top priority right now.

MercadoLibre investors breathed a sigh of relief from the results, and the stock soared 6% in after-hours trading following the announcement. With the company's long-term value proposition still firmly intact, shareholders are optimistic that MercadoLibre can answer the call and keep growing at a healthy rate well into the future.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and MercadoLibre. The Motley Fool has a disclosure policy.