Here’s How MercadoLibre (MELI) Benefitted from its Alternative Payment System

Harding Loevner, an asset management company, released its “Emerging Markets Equity Strategy” first-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the first quarter, the fund declined 0.1% gross of fees and fell short of the MSCI Emerging Markets Index, which posted a return of 2.4%. Weak stock selection in Financials, IT, and Health Care affected the relative performance of the fund offset by stronger returns in Consumer Discretionary. In addition, please check the fund’s top five holdings to know its best picks in 2024.

Harding Loevner Emerging Markets Equity Strategy highlighted stocks like MercadoLibre, Inc. (NASDAQ:MELI) in the first quarter 2024 investor letter. MercadoLibre, Inc. (NASDAQ:MELI) is an online commerce platform that operates Mercado Libre Marketplace and Mercado Pago FinTech platforms. MercadoLibre, Inc.'s (NASDAQ:MELI) one-month return was -5.02%, and its shares gained 34.96% of their value over the last 52 weeks. On June 4, 2024, MercadoLibre, Inc. (NASDAQ:MELI) stock closed at $1,630.65 per share with a market capitalization of $82.67 billion.

Harding Loevner Emerging Markets Equity Strategy stated the following regarding MercadoLibre, Inc. (NASDAQ:MELI) in its first quarter 2024 investor letter:

"Another prime example of how alternative payment systems can boost a company’s core offering is MercadoLibre, Inc. (NASDAQ:MELI), Latin America’s largest online retailer, which we added to the portfolio during the quarter. Since we last wrote about the company four years ago, its management has done a great deal to further differentiate its offerings from those of rivals in a highly competitive industry, leading to market-share gains across the region. In the same way that the company built its own fulfillment infrastructure to improve the customer experience in areas where third-party delivery services were lacking, it has built its own payments and credit infrastructure to otter better shopping experiences to its customers and reduce barriers that have otherwise discouraged e-commerce adoption.

MercadoLibre started its payments business, Mercado Pago, in 2003, only four years after launching its namesake e-commerce platform. It has since become the leading private payment provider in the region, accounting for 13% of all retail sales in Latin America, both online and offline, more than any single card issuer or private form of payment other than cash. Nearly three quarters of its payments now take place outside of MercadoLibre’s online site. Mercado Pago comprises more than half of the company’s total earnings and cash flow, which has helped to fund investments elsewhere—especially in logistics—that have served to reinforce its lead in e-commerce..." (Click here to read the full text)

A customer using their phone to access an online commerce platform.

MercadoLibre, Inc. (NASDAQ:MELI) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 79 hedge fund portfolios held MercadoLibre, Inc. (NASDAQ:MELI) at the end of the first quarter which was 81 in the previous quarter. MercadoLibre, Inc.'s (NASDAQ:MELI) consolidated revenues increased at a fast pace due to strong operational momentum. While we acknowledge the potential of MercadoLibre, Inc. (NASDAQ:MELI) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed MercadoLibre, Inc. (NASDAQ:MELI) and shared the list of best fast growth stocks to buy. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.