The company is heavily investing in scale AI for buyers and sellers on its platforms to drive more revenue growth while the bottom line remains squeezed.
- The company’s fourth-quarter net revenues and financial income totaled $8.76 billion, up 45% from a year earlier and beating estimates of $8.47 billion.
- MercadoLibre said that it was increasingly leveraging AI to enhance the marketplace experience for both buyers and sellers.
- The company said that on the supply side, its Seller Assistant is helping it scale onboarding and support.
MercadoLibre shares fell nearly 5% in overnight trading after lower-than-expected profit following heavy investments in artificial intelligence and advertisement platform technology, even as revenue beat Wall Street estimates.
The company’s stock closed 3% higher on Tuesday, reversing the nearly 7% decline witnessed on Monday, its worst day since November last year. MercadoLibre was founded in 1999 and is the largest e-commerce and fintech ecosystem in Latin America.
MercadoLibre’s efforts are centered on enabling e-commerce and digital financial services for users through a comprehensive suite of technology solutions, with the aim of democratizing access to commerce and financial services.
MELI’s Earnings In A Nutshell
The company’s fourth-quarter net revenues and financial income totaled $8.76 billion, up 45% from a year earlier and beating estimates of $8.47 billion, according to data from Fiscal AI.
MercadoLibre’s quarterly earnings per share came in at $11.03, missing expectations of $11.43. The company said that its investments in ad platform technology, spanning usability, bidding algorithms, and placements, are driving higher adoption and spend.
The company is also working on several AI tools that are supporting account managers for big brands and top sellers, while engaging directly with long-tail sellers to stimulate demand.
MELI Leveraging AI
The company said that it was increasingly leveraging AI to enhance the marketplace experience for both buyers and sellers. In the fourth quarter, MercadoLibre introduced an AI-enhanced search experience in Argentina that leverages insights into individual buyer behavior to expand product discovery beyond a single search term.
Its AI search shows specific brands or premium or value products, depending on the company’s knowledge of the buyer from their extensive search and transaction history. MercadoLibre said that on the supply side, its Seller Assistant is helping it scale onboarding and support.
“It accelerates sellers’ progression to higher reputation tiers, improves listing quality through targeted recommendations, creates short-format videos from a single product photo, and handles inquiries that were previously managed by customer service teams,” MercadoLibre said.
The company said that these initiatives are early steps in a broader effort to embed AI across the marketplace to improve discovery, increase relevance and conversion and deepen engagement.
What Is Retail Thinking?
Retail sentiment on MercadoLibre jumped to ‘extremely bullish’ from ‘bearish’ a week ago, with message volumes at ‘extremely high’ levels, according to data from Stocktwits.
A bullish user on Stocktwits said that investing in MELI stock is a “safe play” and noted that it should be held forever since the company is a monopoly.
Another user on the platform noted that the following day, the stock tends to move in the opposite direction of overnight moves.
In the last 24 hours, the retail message volumes on the stock jumped 172% on Stocktwits and over the past year, the ticker witnessed more than 10% spike in followers on the platform.
A user on Stocktwits said that for a growing company like MercadoLibre, the revenue growth is way more important than a slight “miss” on the bottom line.
Shares of MercadoLibre have declined nearly 13% in the last 12 months.
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