I saw PAGS (PagSeguro Digital), a recent IPO, highlighted in IBD’s New America. It’s a payment processor in Brazil likened to Square. It’s a $9.9 billion company with projected revenues of $509 million in 2017. That’s 54.8% revenue growth over 2016, following 59.8% revenue growth that year. Brazil’s economy appears to be finally expanding for the first time in 4 years. Online shopping is only 3.6% of retail sales in Brazil compared to 8% in the US and 19% in the UK. So there’s plenty of room for future growth.

It’s trading at 19.4 times forward sales while SQ is trading at 13.7. It is growing faster and is about half the market cap. It’s making money and is cash flow positive. It looks like it has no net debt.

What do others here think? I’m not sure about investing in South America. But I watched MELI almost quadruple since I looked at it and didn’t buy.


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Interesting. I have a 9+% position of my portfolio in MELI, so I should probably look into this further to see how the landscape looks with Mercado Pago.

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A quick search found this page:

You can use Google translate to read the page. Sounds like Mercado Pago is more flexible. It is growing like wild fire.

MELI is still a small company with very good potential. I’d not price anchor and add a small position if I don’t have a position. It’s 7% of my portfolio.

Here is a little more data…

The key is they are going after the micro-merchants, ones that may have never accepted credit cards or even have a bank account. There are services list this, but they are owned by banks who will only rent you their terminal for $55/month, where as you can get a loan and buy the PAGS terminal for $264 (loan = $24/month).

PAGS is selling hardware at cost because in Brazil it takes 30 days for a credit card to pay the merchant, so PAGS makes money on short term loans to the merchant so they get their income immediately.

Downside is Brazil has economic reforms going, and one of them may to to greatly shorten this time and thus take away an income source from PAGS.

So don’t put too much in there.


So MELI has the same offering opportunity (payments) and more (ecommerce) but across the whole of SA which lowers risk and is at a lower valuation?

Why would you want to be in PAGS when you can have MELI or SQ?

Just Brazil? Just SA? What about Ant financial and Ali Baba’s Ali Pay? That’s a global opportunity and growing faster.

Just asking.


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