MercadoLibre (MELI) is one of the most compelling businesses today. Yet, most investors barely glance at Latin America.
MercadoLibre’s edge isn’t its size—it’s its ecosystem. Imagine Amazon, PayPal, Shopify, FedEx and Square rolled into one designed specifically for Latin America’s currency swings, underbanked populations and fragile infrastructure.
I’ve studied hundreds of companies. Very few are this complete. It doesn’t just sell products. It builds trust in places where banking access is a luxury, lends to people who’ve never had a credit score and delivers packages across some of the toughest geographies in under 48 hours. What’s more it does all of this profitably.
Since its 2007 IPO, MercadoLibre has returned 9,129%, compounding at 29% annually. To put that in perspective, a $10,000 bet back then would be nearly $1 million today. How many companies can sustain startup-like growth for 25 years? Very few. MercadoLibre is doing exactly that.
When you look at Latin America, it’s tempting to fixate on the risks—political instability, currency shocks, patchy regulation. However, I’ve learnt that the best moats often form in chaos. MercadoLibre’s dominance isn’t just “first mover”. It’s built on relentless innovation: marketplace leadership across Brazil, Mexico and Argentina; MercadoPago’s $197 billion in payment volume; MercadoEnvios’ in-house logistics delivering 80% of packages within two days; MercadoCredito lending to the underserved; MercadoAds monetising attention early; and MercadoShops giving local merchants Shopify-style shopfronts. The result is a platform so embedded that switching hurts.
What impresses me most is how MELI allocates capital. With a 32.2% ROE, 26.8% ROCE and a 29% free cash flow margin—while spending just 0.1% of OCF on CapEx—it still trades like a modest 8% grower, even though FCF has grown at a 49% CAGR over five years. That is mispriced excellence hiding in plain sight, which we like to see.
Marcos Galperin, the founder, maintains approximately 7% ownership and cultivates an exceptional tech culture focused on long-term vision, consistent implementation, extensive regional knowledge and unwavering customer dedication. After 25 years, he says they’re “still growing like a startup”. That mindset matters—culture compounds in ways spreadsheets can’t measure.
Latin America’s e-commerce penetration is just 11% versus 25% in the U.S. and China, and digital payments are still nascent.
Latin America’s e-commerce scene is booming! It’s set to be the fastest-growing in the world, with a projected 19% yearly growth until 2027. We’re looking at the market hitting $194.7 billion by 2024, and it could jump to a massive $269.8 billion Gross Merchandise Volume by 2028. With a population of 650 million and over 70% of adults shopping online, the region offers immense opportunity.
That’s a massive runway. With over 100 million active users in its fintech arms, MercadoLibre has the scale, brand and trust to lead this digital transformation. In my experience, most investors look where everyone else looks. You can often uncover hidden gems by exploring smaller markets with fantastic, lesser-known companies. MercadoLibre is one of them. It’s not a bet on Latin America (LATAM) in the abstract; it’s backing a business that’s already proven it can win in chaos, deliver high returns and still has decades of growth ahead.
Yes, there are risks—currency swings, regulatory hurdles and competition. However, when you truly understand what you own, risk becomes context, not a stop sign. If you missed Amazon, PayPal or Shopify, MercadoLibre offers a second chance—all in one stock. It’s not a “story stock”. It’s a proven profit machine with visible moats, network effects and local expertise. The only question is: do you have the conviction to go where others aren’t looking?
This is why the YFS Intelligent Wealth Fund has made MercadoLibre one of our largest holdings.
Awet Ghirmay, Head of Investment Research
If you want to learn more about this topic, please find the link here.
More information about our fund can be found here: Hargreaves Lansdown or AJ Bell
Risk warnings
The value of investments and the income derived from them may fall as well as rise. You may not get back what you invest. This communication is for general information only and is not intended to be individual advice. You are recommended to seek competent professional advice before taking any action. All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and HM Revenue and Customs practice. Levels and bases of tax relief are subject to change. This blog is based on my own observations and opinions.
