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MercadoLibre grew revenue 45% to $10.75 billion in the third quarter, but profit fell short of expectations as the Latin American e-commerce giant spent heavily on free shipping and new warehouses, and the shares dropped after hours.
Adjusted earnings came in at $8.83 a share, missing the $9.34 analysts had projected, while revenue edged past the $10.69 billion expected. Operating income was $676 million, a 6.3% margin, down from 7.0% in the prior quarter, and net income was $448 million, the company reported Wednesday.
Shares fell 7.8% in after-hours trading, Investing.com reported at 4:14 p.m. ET.
Growth is not the problem. Gross merchandise value rose 38% to $23 billion, payment volume on Mercado Pago jumped 53% to $109 billion, fintech users grew 29% to 93 million and advertising revenue climbed 58%. The credit portfolio swelled 62% to nearly $18 billion. The squeeze came from the cost of that growth: expanded free shipping, fulfillment capacity up almost 20% from the prior quarter, and heavier marketing in Brazil.
The company said it gained market share in its three biggest markets, Brazil, Mexico and Argentina. For the millions of sellers and shoppers who treat MercadoLibre as the Amazon of Latin America, the strategy is familiar: sacrifice profit now to lock in customers for the long run. Investors on Wednesday were not in the mood to wait.
JBizNews Desk | Buenos Aires
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