A growing fintech plus a thriving e-commerce platform equals a great opportunity
Brian Withers (MELI): MercadoLibre may not be one of Cathie Wood’s ARK fund's largest holdings, but with more than $180 million in the stock, she clearly likes this Latin American specialist. If you think you’ve missed out on the run with MercadoLibre, you are wrong. It still has plenty of opportunity to grow in its core markets and beyond. Even though it is known for its e-commerce platform, its fintech business is providing plenty of lift for this growth stock to soar.
Founded in 1999, MercadoLibre has long been an e-commerce presence in Latin America. But early on in its history, the company realized that many consumers in the region were not able to participate in the e-commerce trend due to the underbanked and unbanked status of its citizens. So in 2003, Mercado Pago was established to provide digital payment capability for consumers on its marketplace platform. Since then, its payments segment has become a huge winner.
Over the last twelve months, Mercado Pago has processed over 2.2 billion transactions for a total of almost $57 billion. In the most recent quarter, its payment transaction value has grown an amazing 129% year-over-year in local currency. What’s even more impressive is that the company’s off-platform (in local shops and other non-MercadoLibre marketplace payment locations) payments dollar volume is even bigger than on-platform and has grown at a faster rate. It’s not surprising this business is growing by leaps and bounds with less than 50% of adults in Argentina, Mexico, and Columbia having a bank account or debit card.
But the fintech business is not just about payments. Mercado Pago is becoming an end-to-end digital banking platform with products like insurance, mobile wallet, loans, and investments. But that's not all. Did I mention that MercadoLibre also has the leading e-commerce platform in the region? There is lots to love about this well-established up-and-comer regional leader. It’s no wonder the ARK funds recently added over 13,000 shares to its position. If you have $5,000, or even $500 at your disposal, you could pick up a share or even dip your toe in with a partial share. If you buy now and hold for the next three to five years (or even for the next decade), you’ll be happy you did.
