Tariffs Hit Brazil: Can MELI Maintain Momentum in its Biggest Market?

MercadoLibre MELI remains firmly rooted in Brazil, which currently contributes more than 50% of its revenues. Strong growth across commerce and fintech, rising brand preference and new Mercado Pago branding have made Brazil its most important and established market.However, President Trump’s 50% tariff on Brazilian imports has raised concerns. MercadoLibre stock was down more than 3% in Thursday trading after Trump’s announcement. While it targets geopolitical tensions more than trade flows, the resulting pressure on Brazil’s economy could indirectly affect MercadoLibre. A weaker currency and slower GDP growth may squeeze consumer spending, impacting e-commerce demand. Potential retaliatory moves from Brazil may also disrupt supply chains or raise logistics costs, adding to the uncertainty.In the first quarter of 2025, MercadoLibre generated $3.08 billion in net revenues from Brazil, up 20% year over year in USD terms. The Zacks Consensus Estimate for 2025 revenues from Brazil is pegged at $14.3 billion. However, any retaliation from Brazil or further escalation in tariffs could add pressure to MercadoLibre’s operations in its biggest market, which investors should monitor closely.MELI is ramping up its commitment to Brazil with a record 34 billion reais ($5.8 billion) investment planned for 2025, a 48% jump from last year. The spending will support logistics, technology, marketing, entertainment, hiring and loyalty programs across both commerce and fintech. With Brazil contributing over half of MELI’s revenues, this move highlights its focus on strengthening operations in its most important market.MELI Faces Stiff Competition in BrazilMercadoLibre faces rising competition in e-commerce from Amazon AMZN and Sea Limited SE, which are expanding their operations in Brazil.Amazon offers customers more than 100 million products across 50 categories in the country. Amazon's logistics network in Brazil includes 10 fulfillment centers and 22 delivery stations throughout the country.Shopee, backed by Sea Limited, is expanding in Brazil with aggressive pricing, mobile-first engagement and incentives for sellers. Sea Limited’s Shopee opened its first fulfillment distribution center in the Sao Paulo metro area late last year, designed to store products from Brazilian sellers and speed up last-mile delivery in the region.MELI’s Share Price Performance, Valuation and EstimatesMELI shares have gained 41.7% in the year-to-date (YTD) period, outperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector’s growth of 6.8% and 4.5%, respectively.MELI’s YTD Price PerformanceImage Source: Zacks Investment ResearchFrom a valuation standpoint, MELI stock is currently trading at a forward 12-month Price/Sales ratio of 3.91X compared with the industry’s 2.17X. MELI has a Value Score of D.MELI ValuationImage Source: Zacks Investment ResearchThe Zacks Consensus Estimate for second-quarter 2025 earnings is pegged at $12.01 per share, which has remained steady over the past 30 days, indicating 14.60% year-over-year growth.MercadoLibre, Inc. Price and Consensus MercadoLibre, Inc. price-consensus-chart | MercadoLibre, Inc. QuoteMercadoLibre currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. #1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Sea Limited Sponsored ADR (SE): Free Stock Analysis Report MercadoLibre, Inc. (MELI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks