Shares of MercadoLibre (NASDAQ:MELI) moved lower in U.S. premarket trading, reversing earlier gains after the Latin American e-commerce leader reported a sharp drop in quarterly profit driven by increased investment in credit and logistics initiatives.
The Uruguay-based company posted fourth-quarter earnings per share of $11.03, below the analyst consensus estimate of $11.65.
Speaking to Reuters, Senior Vice President of Investor Relations Leandro Cuccioli said weaker profitability reflected margin pressure stemming from spending aimed at strengthening long-term growth. The company reported an earnings before interest and taxes margin of 10.1%, down from 13.5% a year earlier.
Cuccioli highlighted expanded credit card issuance — which increases loan-loss provisions — along with broader free-shipping offers and growth in direct-to-consumer sales as key factors behind the higher investment levels.
Despite the earnings shortfall, revenue for the quarter reached $8.76 billion, exceeding analyst expectations of $8.41 billion. Strong demand in Brazil and Mexico helped drive the top-line performance, according to Cuccioli.
MercadoLibre’s total credit portfolio climbed to $12.5 billion by the end of 2025, representing a 90% increase compared with the previous year.
“We ultimately agree with MercadoLibre’s view that investing to win principality in a rapidly growing, underpenetrated opportunity is better for long-term shareholder value than short-term margin optimization,” analysts at BTIG said in a note. “Management was vague as to if this is the peak period of margin dilution from investments, but there are indications that playing hard on offense has made for the best defense.”
During the post-earnings call, management also addressed regional geopolitical developments, noting that the company “did not see much change” in its Venezuelan operations in recent months, according to an executive. The comments followed political developments earlier this year, though the company indicated the market currently has limited impact on overall results.