James Brumley, The Motley Fool
7 min read
In This Article:
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Latin America's e-commerce and fintech revolutions are still in their early stages, which gives MercadoLibre enormous room to grow.
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It's often described as the Amazon.com of Latin America -- and that's not an unfair description. It is a somewhat incomplete description though. MercadoLibre (NASDAQ: MELI) may be that region's e-commerce leader, but it could also be accurately compared to eBay, PayPal, and even FedEx by virtue of its online auction platform, online payments and fintech platform, and its logistics operations (respectively).
That all positions it to capitalize on some massive opportunities.
In many ways, this region is on the cusp of its version of the e-commerce and digital banking explosion that took place in North America around the turn of this century. Research outfit Payments & Commerce Market Intelligence reports that in South America, the share of consumer payment volume handled using cash has fallen from 57% in 2022 to 37% now. Separately, researchers at PYMNTS Intelligence have predicted that cash will only account for 17% of Latin America's in-store payments by 2030, down from last year's 25%, which was well down from 2014's figure of 67%.
The rise of digital payments paired with the advent of mobile connectivity (smartphone shipments to Latin America reached a record-breaking 137 million last year, according to data from Canalys) is of course driving continued growth of the continent's e-commerce industry. Payments & Commerce Market Intelligence expects Latin America's e-commerce market to grow to the tune of 21% this year, in fact, reaching $769 billion en route to topping $1 trillion by 2027 -- about doubling 2023's tally of $507 billion.
All of this, of course, bodes well for MercadoLibre, which has already been capitalizing on its well-established foothold within these businesses. The company reported revenue growth of 37% year over year for 2024 and a comparable increase in earnings. Analysts expect similar growth this year and for the next few years.
