Hello. I see you expect the FCF of 2024 to be 3797. However the LTM FCF after the H1 2024 results is already 5628. Does that make you rethink your estimations for the FCF in the coming years? Or do you think that the 5628 LTM FCF is somehow special and won't be replicated in the coming years?
This analysis was conducted at the beginning of the year, prior to MELI's Q1 earnings report. The assumptions have proven conservative, as intended, and I have been handsomely rewarded. If I were to update my analysis today, I would review all the assumptions, factoring in the H1 results. However, it’s important to note that the LTM FCF is distorted due to the credit business. Provisions for credit losses are non-cash items, and increases in loans receivable are treated as investing cash flow. I would adjust the LTM 2024 FCF to account for this, as I did in this analysis. I hope that answers your question.
Thanks for the feedback. The terminal value of 86,738 has been discounted based on the 2028 FCF. Formula is as follows: (6,803*(1+2%))/(10%-2%). I hope that helps.
Hello. I see you expect the FCF of 2024 to be 3797. However the LTM FCF after the H1 2024 results is already 5628. Does that make you rethink your estimations for the FCF in the coming years? Or do you think that the 5628 LTM FCF is somehow special and won't be replicated in the coming years?
This analysis was conducted at the beginning of the year, prior to MELI's Q1 earnings report. The assumptions have proven conservative, as intended, and I have been handsomely rewarded. If I were to update my analysis today, I would review all the assumptions, factoring in the H1 results. However, it’s important to note that the LTM FCF is distorted due to the credit business. Provisions for credit losses are non-cash items, and increases in loans receivable are treated as investing cash flow. I would adjust the LTM 2024 FCF to account for this, as I did in this analysis. I hope that answers your question.
Really nice piece of analysis. Thanks for sharing!
Thanks for the feedback 👍
Thanks for the analysis.
I have a question though: shouldn't you discount the terminal value of 86,738 back to the present? I believe that terminal value is for the year 2028.
Thanks for the feedback. The terminal value of 86,738 has been discounted based on the 2028 FCF. Formula is as follows: (6,803*(1+2%))/(10%-2%). I hope that helps.
Excelente y completa evaluación para una compañía también excelente! MELI nunca estuvo en duda. Es una de esas para "hold it, don´t sell it"!
Gracias!!!
Muchas gracias mi amigo
Thanks a lot for this write up Wolf - excellent as always!
Much appreciated Mathias, glad you enjoyed it
I am analyzing now Sea ltd. Could be a good idea for a ✍️ 🆙
I’ve written about Sea quite bit, should be a recent article on the Q4 earnings if you search on our website
Great analysis with margin of safety! Pulled the trigger last Friday for a 3% position!
Thanks for the feedback glad you enjoyed it 👍