U.S. investors need to pay more attention to this Latin American conglomerate.
One company that deserves more investor attention is Latin American conglomerate MercadoLibre (MELI -0.32%), whose growth has been largely unseen by U.S. investors. Founder Marcos Galperin launched this company while still an MBA student at Stanford, but it does not operate in the U.S. and receives relatively little American press coverage.
A $10,000 investment on its 2007 IPO day would be worth almost $560,000 today, and such growth could make new investors wonder whether a small investment in the company could make a new shareholder a millionaire.
MercadoLibre’s path to $1 million
Investors who bought $10,000 in MercadoLibre stock on the IPO day are likely to eventually hold a position worth more than $1 million. At this point, the stock would only need to increase a little less than 80% from current levels and those shareholders would achieve such a milestone. Since the market cap is $81 billion, an 80% increase in the market cap would take it to $145 billion, leaving it a large-cap stock below megacap status.
Also, Digital Commerce 360 forecasted a compound annual growth rate (CAGR) of 23% for the Latin American e-commerce industry through 2026.
MercadoLibre is capitalizing on this growth by facilitating e-commerce and creating other businesses that support e-commerce and succeed independently. Mercado Pago facilitates payments in its largely cash-based markets, while Mercado Envios facilitates order fulfillment while offering faster package delivery. Other businesses, such as digital advertising, have become additional revenue drivers.
MercadoLibre by the numbers
Thanks to these businesses, MercadoLibre’s financials far exceed the forecast CAGR. In the first quarter of 2024, revenue grew 36% year over year to $4.3 billion. Strong e-commerce growth, especially in Brazil and Mexico, drove that increase. Its Q1 2024 performance also closely matched the 37% revenue growth rate from 2023.
In the first three months of 2024, improving financials brought a net income of $344 million, up 71% from the $201 million in the year-ago quarter.
Moreover, the market may not have fully grasped MercadoLibre’s growth story. Its P/E ratio is 71, a high level by S&P 500 standards but not far above its massive U.S. counterpart, Amazon, at 55 times earnings. If it maintains that level of profit growth, it is positioned to make its current shareholders much wealthier.
What if I invest now?
Unfortunately, the path to $1 million is a little murkier for those investing $10,000 today. Indeed, with its current growth rates, the increases have long outpaced the S&P 500 and should continue to do so.
Still, such a feat would require a 100-fold increase in the market cap. That means MercadoLibre’s current $81 billion market cap has to grow to $8.1 trillion to reach this milestone.
This level is 2.4 times the current market cap leader, Microsoft, at $3.4 trillion. While MercadoLibre’s businesses should continue to serve as tremendous growth catalysts, it has given investors no indication that it can grow to that level.
Will MercadoLibre turn more investors into millionaires?
MercadoLibre is highly likely to turn many of its oldest shareholders into millionaires. Additionally, those who invest a large sum, such as $100,000, have a significant likelihood of reaching that milestone.
However, it is probably too late to invest a smaller sum like $10,000 and expect to become a millionaire. Admittedly, a new investment made now should make investors richer than a similar position in the S&P 500, and a $10,000 position could bring an investor closer to millionaire status over time.
Nonetheless, starting now means the market cap has to grow far past current records to carry the position to that level. Hence, aspiring millionaire investors should either open a larger position in MercadoLibre or adjust their growth expectations.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Will Healy has positions in MercadoLibre. The Motley Fool has positions in and recommends Amazon, MercadoLibre, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
