The e-commerce industry is good at creating billionaire maker stocks. Amazon Rising more than 500 times since the depths of the dot-com crash in the early 2000s, many traditional brick-and-mortar retailers have made significant profits by integrating e-commerce and in-store retail.
However, one of the top e-commerce companies that may not get as much attention is: mercadolibre (Meri 2.35%). The Latin American conglomerate does not operate in the United States, so it could be easily overlooked by U.S. investors. Still, given its success in e-commerce and its ability to build successful businesses related to e-commerce, investors should expect the company to continue creating billionaires.
How MercadoLibre Thrives
As previously mentioned, MercadoLibre operates in Latin America. The region regularly deals with political turmoil, rampant inflation, and regulatory systems filled with confusing and complex rules.
Nevertheless, this company prosper Free yourself from facing such challenges. MercadoLibre started as an e-commerce company, but quickly realized that cash-based customers often couldn't make purchases online. Therefore, Mercado created his Pago to offer financial products that customers can purchase on the platform.
The business was so successful that it began serving customers who did not purchase MercadoLibre products. Additionally, Mercado Pago's investment arm allowed Argentines to protect their funds from the country's hyperinflation.
Additionally, the company's fulfillment and logistics business, Mercado Envios, found success in a similar manner. The company introduced one-day and two-day shipping in many parts of Latin America and has since expanded its business both in conjunction with and separate from its e-commerce division.
Growth of MercadoLibre
Since MercadoLibre stock debuted in August 2007, these businesses have helped the stock price grow about 95 times. Therefore, an investor who invested his $10,000-plus, or more, on the IPO day became a millionaire with the stock.
Despite these huge profits, the company's market capitalization is less than $90 billion, about 5% of Amazon's size. So it's small enough that it still has the potential to grow at a significant pace, and judging by the numbers, it certainly has.
Investors won't know the company's full-year results until the numbers are released in late February. If the first nine months of 2023 are any indicator, these numbers could show a significant increase.
During this period, MercadoLibre reported revenue of more than $10 billion, an increase of 36% from the first three quarters of 2022. Moreover, it wasn't until 2021 that the company started reporting full-year profits. Therefore, the increase in net income should not surprise investors. His revenue for the first three quarters of 2023 was $822 million, an increase of 159% compared to the same period in 2022.
Additionally, stocks may not be as expensive as some assume. The company trades at a P/E ratio of around 90 times, a level of growth that investors may overlook, given that profits more than doubled last year. Additionally, the forward P/E ratio is just over 50 points and growing even faster, which should bode well for MercadoLibre investors.
MercadoLibre plans to mint even more billionaires
Considering past and future profits, MercadoLibre may have just started minting millionaires. The company continues to lead the way in e-commerce. The company has a successful business that works synergistically with the e-commerce sector to solve problems through innovation.
Additionally, Latin America's challenges tend to strengthen MercadoLibre rather than negatively impact business. That probably means the stock is likely to grow no matter what happens in the region. As MercadoLibre continues to serve more customers, that will likely mean more investors will see their investments in the company grow to seven-figure levels and beyond.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. Will Healy has a position in his MercadoLibre. The Motley Fool has positions in and recommends Amazon and MercadoLibre. The Motley Fool has a disclosure policy.
