Meli: a FinTech force in LatAm

Link to seeking alpha article by JR Research on Mercado Libre’s “limitless” potential for FinTech in Latin America.…

Ongoing growth in e-commerce.

The big opportunity ahead is FinTech (50% of the LatAm population is currently unbanked) -Loans, Credit, Brokerage, Crypto, etc.

Synergy of a wide variety services and customer interactions with an increasingly electronically connected population.

My own view here is that holding Mercado Libre (MELI) stock feels like cheating. MELI has a history of employing the best tech ideas already proven elsewhere in the world (Ebay, PayPal, Amazon and now Ten Cent and Alibaba) in Latin America. They are a dominant force and we already know how this growth pattern in e-commerce and now FinTech has gone in other markets in North America, Europe, and East Asia.

Long MELI 19% of Portfolio


Brian Withers of MF had a nice focus on the Fintech portion of MELI, he did not even talk about the E-commerce business on 24 June 2001 at hour #2 for those interested in more information. There appears to be a large TAM in Central and South America MELI’s Fintech business. 1.6 billion in TTM fintech revenue,…


Can you fill this in a bit more for those not as familiar with this company? I’ve known OF Meli for years but I didn’t think they were a “Saul-style” hypergrowth story. Can you share some revenue growth, gross margin, etc, numbers? Maybe explain how they are scaling efficiently? …that sort of thing. The real stuff. I mean, if you read your post it is all feelings and macro theories. I don’t say that to be mean, I just want to know how you justify such a large holding…why is your conviction so high?


RafesUserName those are great questions and I am sorry to say answering them here is a bit beyond my posting skills (I struggle with the clerical side of things!)

Here is a link to their investor relations page with a wonderful overview of the business with beautiful charts and graphs. (Much clearer than what I could provide you.)…

Take a look and tell me if this is a “Saul-style” hypergrowth story. At 19% of my portfolio, I believe that it is!

I will try to convey revenue growth increases:

revenue for the quarter ending March 31, 2021 was $1.378B, a 111.39% increase year-over-year.
revenue for the twelve months ending March 31, 2021 was $4.700B, a 89.92% increase year-over-year.

annual revenue for 2020 was $3.973B, a 73.04% increase from 2019.
annual revenue for 2019 was $2.296B, a 59.5% increase from 2018.
annual revenue for 2018 was $1.44B, a 18.34% increase from 2017.

Regarding gross profit margin:

Gross profit (along with operating margin and net margins) has fallen over the years from a high of 80% in 2009 to a low of 37% in the 4th quarter of 2020 as they have invested in hiring, growing the business, and most costly of all establishing a fullfillment network (akin to Amazon’s). This fullfillment network will provide some “moat” for years to come. However,most recently, gross profit has ticked back up to 43% in the 1st quarter of 2021.

The important new idea that I thought may be interesting to the board is that FinTech promises likely continued acceleration of revenue growth and profit margin on top of an already diverse and proven business which has established significant penetration into a population greater than that of the United States with tremendous levels of “anti-fragility” (A huge shout out to Brian Stoffel,aka TMFcheesehead, for his sharing of his antifragile framework!). In my opinion, this is a resilient and diversified business with great first-mover advantage, proven track record of execution, and incredible opportunities for new growth. This seems to me like a wonderful opportunity to make money, and in gratitude to the board I wanted to share it with all of you.

Rafes, once again I appreciate your fine questions and am grateful for your patience with my limited presentation skills. I would love to hear other’s answer to the question: Is MELI a “Saul-style” stock.

Long MELI 19% of portfolio


Gross profit (along with operating margin and net margins) has fallen over the years from a high of 80% in 2009 to a low of 37% in the 4th quarter of 2020 as they have invested in hiring, growing the business, and most costly of all establishing a fullfillment network (akin to Amazon’s). This fullfillment network will provide some “moat” for years to come. However,most recently, gross profit has ticked back up to 43% in the 1st quarter of 2021. – Wishyouwell

I have a 6.3% position in MELI yet I have not intensely analyzed the company (I merely see the LONG TERM performance of the company and have hitched a ride), so here is my brief opinion on whether it is a Saul-style company:

Yes and no…

Yes: They are developing a fintech arm of the company and that is rapidly growing and quite likely high margin… but, in the “no” column, it is technically not subscription. It is, however, quite sticky like most financial products. I note there are other companies here that are not subscription… can’t mention because I keep adding.

No: They are a lot like Amazon in some respects. Selling, taking delivery of product (with warehousing aspects that are capital intensive) and shipping/delivering it (also capital intensive)… and they are rapidly expanding their reach and local intensity of service. That’s NOT “Saul-like”. It’s “merely” Amazon like.

So, bottom line, this company isn’t likely to become a 80% margin subscription company. Just a plodding Amazon-like company with more fintech and no MGM. Writing this instead of standing in front of you keeps me from expressing the non-verbals of teasing here. Clearly, it is not a “Woe is us” situation to “merely” own an Amazon analogue.

See? No exhaustive analysis. (I’m about to go out for my daily walk).

Again, MELI is a bit over a 6% portfolio share. And, interestingly, it has kept pace with that share with the rest of my portfolio over the last couple years.

Also, I have a 16.4% allocation of SE. SE is sorta like Amazon (without prime and without an MGM) and sorta like MELI (but in SE Asia/not China)… but a huge chunk of the company is online video gaming (as opposed to just saying gaming and have you think “gambling”). That game portion is slowly diminishing as a proportion of the company because the shopping/fintech portion is growing so fast. Overall, solidly over 100% growth as well.

Extra credit: I also have a 5% allocation in GLBE, a seldom discussed company here that focuses on cross border shopping/shipping. Again, sort of like all the above except growing faster than any of them. Worthwhile for you to check out the prior discussion on this board regarding this company.

Summary: I think there is merit in owning these platforms. People (and companies) are interested in the convenience and ease of shopping and appreciate (becoming dependent on) their fintech. The hyper growth has been rewarding to date and I expect that to continue for the foreseeable future (at least the next decade).

Anyway, time to get dressed and walk my 4 miles through the soup of Charlotte humidity… :slight_smile:

Rule Breaker Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.


I detect a little negativity attached to my use of the phrase “Saul-style”. What I meant, personally, when I said that, was “show me the numbers that prove the company is a well run business and that it is growing fast”. Since pretty much all my companies grow >50% and will only slow over time, I’d like new entries to beat that at least, with runway to keep going for a while. I couldn’t care less what the business model is, as long as it is good. The only way I know to prove a business is well run and the business model is good is to look at the results of these things and to me the results are the quarterly reports. There is no other way that I know of to see how the company is performing from the outside.

In the link in the original post there is a terrifying graph showing Meli revenue growth plummeting over the coming years (direct link:…). THey go on to talk about why they see “a discernible slowdown over the next few years” and also why they think they could be wrong, but this is all very hand-wavy at the future. My past self might have gotten caught up in this article while my current self wants to remove story from fact.

Here is the document that should be linked:…

Net Revenues of $1.4 billion, up 158.4% year- over-year on an FX neutral basis
• $14.7billionTotalPaymentVolume,up 129.2% year-over-year on an FX neutral basis
• $6.1billionGrossMerchandiseVolume,up 114.3% year-over-year on an FX neutral basis

Unique active users grew by 61.6% year-over-year, reaching 69.8 million.
? Gross merchandise volume (“GMV”) grew to $6.1 billion, representing an increase of 77.4% in USD and
114.3% on an FX neutral basis.

Note the difference in performance there between USD and “FX neutral”. I’m commenting in real-time on this as I read as I don’t know why one is better than the other; if this is something that needs translating.

? Net revenues for the first quarter were $1.4 billion, a year-over-year increase of 111.4% in USD and 158.4% on an FX neutral basis.

I like that they list both. 111.4% is awesome. My very next questions are:

  1. Is what is the QoQ this time and a few back, just incase last year was an easy compare?
  2. Is this seasonally high versus other Qs?

? Commerce revenues increased 139.2% year-over-year in USD reaching $910.6 million, while Fintech revenues increased 72.4% year-over-year in USD reaching $467.8 million.
? Gross profit was $591.4 million with a margin of 42.9%, compared to 48.0% in the first quarter of 2020.
? Total operating expenses were $500.5 million, an increase of 46% year-over-year in USD. As a percentage of revenues, operating expenses were 36.3%, compared to 52.5% during the first quarter of 2020.

Market cap is getting large but still not huge, in the ~$78B range. That is roughly half the size of SHOP and not too much bigger than CRWD (~$58B).

I’m out of time so I can’t do what I feel is the next most important thing to see, which are three little tables

  1. Revenue growth YoY
  2. Revenue growth QoQ
  3. Revenue change per Q (just the difference to see the actual amount of change
    …going back maybe 2-3 years, only because there is e-commerce involved which tends to be seasonal so several years are needed to see a pattern. This just requires going through the data they provide in their investor relations site and putting it in a spreadsheet, then running some quick percentage equations to get the two views. Secondary to that, I might plot out a few other numbers like the GM since it sounds lumpy. That sort of thing.

MELI is a well known TMF favorite and has been doing great for a long time. The quick copy and paste number are amazing so it is quite interesting. BUT, I would love to see information that removes both hype/story and macro concepts before buying in, since I am the only one I can blame for getting carried away and I LOVE a good story.

One last point. If the above stuff isn’t easy, then I’d just skip the whole investment. Another big lesson I learned around here is that there are a lot of great companies so I might as well try and keep it simple.


@RafesUserName - I find Greg’s Finance Thingee a useful tool to get a table of these numbers.

Here’s a link to his site:

And here’s the table for Mercado Libre (MELI):

### Revenue

| Quarter   | Revenue   | T6M     | T9M     | TTM     | 𝝳 (q-1)   | 𝝳 (YoY)   | 𝝳 (T6M)   | 𝝳 (T9M)   | 𝝳 (TTM)   |
| 2014Q1    | 115.38m   |         |         |         | NaN       | NaN       | NaN       | NaN       | NaN       |
| 2014Q2    | 131.85m   | 247.23m |         |         | 14.3%     | NaN       | NaN       | NaN       | NaN       |
| 2014Q3    | 147.94m   | 279.78m | 395.17m |         | 12.2%     | NaN       | NaN       | NaN       | NaN       |
| 2014Q4    | 161.37m   | 309.31m | 441.15m | 556.54m | 9.1%      | NaN       | 25.1%     | NaN       | NaN       |
| 2015Q1    | 148.10m   | 309.47m | 457.41m | 589.26m | -8.2%     | 28.4%     | 10.6%     | NaN       | NaN       |
| 2015Q2    | 154.31m   | 302.42m | 463.79m | 611.72m | 4.2%      | 17.0%     | -2.2%     | 17.4%     | NaN       |
| 2015Q3    | 168.64m   | 322.95m | 471.06m | 632.43m | 9.3%      | 14.0%     | 4.4%      | 6.8%      | NaN       |
| 2015Q4    | 180.73m   | 349.37m | 503.69m | 651.79m | 7.2%      | 12.0%     | 15.5%     | 10.1%     | 17.1%     |
| 2016Q1    | 157.63m   | 338.36m | 507.00m | 661.32m | -12.8%    | 6.4%      | 4.8%      | 9.3%      | 12.2%     |
| 2016Q2    | 199.64m   | 357.27m | 538.01m | 706.65m | 26.7%     | 29.4%     | 2.3%      | 14.2%     | 15.5%     |
| 2016Q3    | 230.85m   | 430.49m | 588.12m | 768.85m | 15.6%     | 36.9%     | 27.2%     | 16.8%     | 21.6%     |
| 2016Q4    | 256.27m   | 487.12m | 686.77m | 844.40m | 11.0%     | 41.8%     | 36.3%     | 35.5%     | 29.6%     |
| 2017Q1    | 269.68m   | 525.95m | 756.80m | 956.44m | 5.2%      | 71.1%     | 22.2%     | 40.7%     | 44.6%     |
| 2017Q2    | 283.88m   | 553.56m | 809.83m | 1.041b  | 5.3%      | 42.2%     | 13.6%     | 37.7%     | 47.3%     |
| 2017Q3    | 304.92m   | 588.80m | 858.48m | 1.115b  | 7.4%      | 32.1%     | 12.0%     | 25.0%     | 45.0%     |
| 2017Q4    | 358.06m   | 662.98m | 946.87m | 1.217b  | 17.4%     | 39.7%     | 19.8%     | 25.1%     | 44.1%     |
| 2018Q1    | 320.98m   | 679.04m | 983.96m | 1.268b  | -10.4%    | 19.0%     | 15.3%     | 21.5%     | 32.6%     |
| 2018Q2    | 335.38m   | 656.35m | 1.014b  | 1.319b  | 4.5%      | 18.1%     | -1.0%     | 18.2%     | 26.8%     |
| 2018Q3    | 355.28m   | 690.66m | 1.012b  | 1.370b  | 5.9%      | 16.5%     | 1.7%      | 6.8%      | 22.9%     |
| 2018Q4    | 428.02m   | 783.30m | 1.119b  | 1.440b  | 20.5%     | 19.5%     | 19.3%     | 13.7%     | 18.3%     |
| 2019Q1    | 473.77m   | 901.79m | 1.257b  | 1.592b  | 10.7%     | 47.6%     | 30.6%     | 23.9%     | 25.6%     |
| 2019Q2    | 545.24m   | 1.019b  | 1.447b  | 1.802b  | 15.1%     | 62.6%     | 30.1%     | 43.0%     | 36.6%     |
| 2019Q3    | 603.03m   | 1.148b  | 1.622b  | 2.050b  | 10.6%     | 69.7%     | 27.3%     | 45.0%     | 49.7%     |
| 2019Q4    | 674.27m   | 1.277b  | 1.823b  | 2.296b  | 11.8%     | 57.5%     | 25.3%     | 45.0%     | 59.5%     |
| 2020Q1    | 652.09m   | 1.326b  | 1.929b  | 2.475b  | -3.3%     | 37.6%     | 15.5%     | 33.3%     | 55.4%     |
| 2020Q2    | 878.37m   | 1.530b  | 2.205b  | 2.808b  | 34.7%     | 61.1%     | 19.8%     | 35.9%     | 55.8%     |
| 2020Q3    | 1.116b    | 1.994b  | 2.646b  | 3.320b  | 27.0%     | 85.0%     | 50.3%     | 45.2%     | 62.0%     |
| 2020Q4    | 1.327b    | 2.443b  | 3.321b  | 3.973b  | 19.0%     | 96.9%     | 59.6%     | 72.1%     | 73.0%     |
| 2021Q1    | 1.378b    | 2.706b  | 3.821b  | 4.700b  | 3.9%      | 111.4%    | 35.7%     | 73.3%     | 89.9%     |

Daws (former MELI shareholder, no current position)


That’s an awesome resource but to re-iterate an earlier post, with MELI, you HAVE to look at FX neutal revenue numbers when you are looking at YoY and QoQ change. Absolute US$ numbers are fine as a quantum to look at but not change.

I believe for many of the last 5-7 years, the FX neutral growth rates would have been in very high double digits or triple digits.

For example let’s take the Q4 2018 quarter which is listed at 19.5% YoY. Here’s what the earnings report had to say…

Net revenues for the fourth quarter grew to $428.0 million, a year-over-year increase of 19.5% in USD and 61.8% on an FX neutral basis.

This is one company where FX neutral comparisons is essential.


P.S I understand and sympathise with the search for an expression for describing a stock in a Saul sense. We cannot use the term “Saul Stock” as Saul may or may not actually own this stock or have owned this stock. I sometimes refer to a stock that qualifies for consideration as “Saul Method” stock and I read “Saul-style” stock as a similar attempt to frame a qualifying stock without an attribution.