(Bloomberg) -- Shares of MercadoLibre Inc., the giant Latin American e-commerce and payments firm, soared after second quarter earnings trounced analyst estimates, propelling it past Brazilian energy producer Petrobras as the most valuable company in the region.
Shares jumped nearly 11%, giving MercadoLibre a market capitalization of $90 billion. That surpasses the $85.5 billion market value for Petroleo Brasileiro SA, as the oil firm is formally known. It’s the first time since a short period in 2021 during the pandemic-fueled e-commerce craze that MercadoLibre tops the region’s ranking, according to data compiled by Bloomberg.
Chief Executive Officer Marcos Galperin took to X on Friday to celebrate the company’s 25th anniversary and the surge past Petrobras.
“It had to be done... and we did it,” he wrote.
The Montevideo, Uruguay based-company reported earnings that showed profit doubling from a year earlier and a record number of users for its fintech platform in a sign that its geographic and product expansion is picking up speed.
“This result once again highlights MELI’s solid operating momentum and strong longterm prospects,” Itau BBA analysts led by Thiago Macruz said in a note, keeping its outperform rating on the stock.
Net revenue was $5.1 billion for the three month period ending June 30 compared with the median estimate of $4.7 billion in a Bloomberg survey. Net income was $531 million, topping the $415 million expected by Wall Street analysts.
Gross merchandise value, or GMV, jumped 20% from a year earlier to $12.6 billion in the period, with Brazil and Mexico gaining 36% and 30% respectively in that period.
“Those are rates of a startup really,” Chief Financial Officer Martin de los Santos said in an interview before the release. “After 25 years, we’re very encouraged by those numbers and we continue to gain market share in those countries.”
Of the net revenue, $3 billion corresponded to the commerce business while $2.1 billion came from the payments platform Mercado Pago, according to a company release.
Founded 25 years ago, MercadoLibre has continued to push into new areas including advertising and insurance while consolidating its core businesses of e-commerce with fast delivery across vast geographies and electronic payments and financial solutions in a region where cash remains king in many places.
The stock has 25 buy recommendations and three holds with an average 12-month price target of $2,023 a share and last traded around $1,776.
“All the major segments outperformed, including hypergrowth in Brazil GMW, a big uplift in Fintech revenue, and further penetration of AdTech,” Susquehanna analyst James Friedman wrote in a report.
A Barclays report on the release was titled “Safe Haven Amid E-comm Carnage.”
Argentina, which was a drag in the first quarter due to a devaluation as part of deep economic reforms by the Javier Milei administration, improved in the most recent period.
Total payment volume totaled $46 billion in the quarter and Mercado Pago surpassed the mark of 50 million active users for the first time. In commerce, unique users nearly hit 57 million.
As the company looks to grow its financial services from Brazil to Mexico, it issued 1.6 million new credit cards in the quarter between the two countries. The total credit book stands at just under $5 billion. Assets under management reached $6.6 billion driven by high-yield accounts in Argentina and Brazil.
In early July, Mercado Pago said that it will begin paying 15% on similar accounts in Mexico, four percentage points higher than previously, the CFO said.
The company, which plans to request a banking license in Mexico, has a credit portfolio there that exceeded $1.5 billion in the quarter and is “the largest Fintech in terms of month active users” in the country, according to a letter to shareholders.
Its nascent advertising business grew 51% from a year ago to now represent 2% of GMV.
Adding to the Argentina devaluation, the Brazilian real and Mexican peso have also taken a hit this year, which adds to the macroeconomic challenges of operating in the region. Though management points to its quarter-century track record of managing political, economic and financial volatility.
“The secular trend of people moving online and digitalizing their payments and their banking experience is probably stronger than any other force that plays against us in the short term,” de los Santos said. “For the most part we’re super satisfied despite the challenges that we faced.”
--With assistance from Vinícius Andrade.
(Recasts to lead on company becoming most valuable in Latin America.)
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