Contxto – On April 1, Mercado Libre stock was priced at US$447. Nearly two months later and on May 20, it’s nearly doubled to be valued at US$828.
Its rapid growth illustrates the untapped potential for both e-commerce and the fintech industry in Latin America.
Disclaimer: I am not a financial advisor, investor, broker, or anything of the sort. Everything that follows is my own opinion and for informational purposes only. None of this constitutes advice of any form.
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Mercado Libre’s thundering e-commerce boom
Rightly so, e-commerce and electronic payments are here to stay, as Mercado Libre’s rapid stock growth shows. In any case, I’m one to believe its stock may not hit this highpoint again and its value may even slip, but not by much. This is due to two reasons.
First off, coronavirus and mandatory quarantines throughout Latin America have largely contributed to Mercado Libre’s increased business. As these circumstances ebb away, many users will return to in-person purchases and sales.
Mercado Libre’s stock value may have also benefited from its surge in transaction volume through its electronic payment platform, Mercado Pago. But this increase is also temporary because of Covid-19
- Related article: Why Mercado Libre & Despegar are destined to opposite fates
The bad news is that with the inbound economic recession, users may consume less on its e-commerce platform. Likewise, people may also keep cash stored away at home rather than putting it into an account to transfer through Mercado Pago.
Because of these factors, I doubt Mercado Libre’s stock will continue to skyrocket. Instead, it will stabilize and perhaps even slip.
The good news for Mercado Libre is that because fintech and e-commerce industries are finding a more permanent foothold within the region thanks to the pandemic, the Argentine company is now better poised in users’ minds (and pockets).
Related articles: Tech and startups from Argentina!
-ML
