14 Comments
User's avatar
Marcin's avatar

Dziękuję! :)

MB's avatar

Great summary. Thank you!

AJ's avatar

Good one, thanks for sharing. But I feel you are a bit too bullish. I am more conservative. Not sure they will deliver this level of growth, and there is always a geopolitical/ FX risk. I estimate FV at $2521, buying around $1900.

Wolf of Harcourt Street's avatar

Thanks for the comment. Geopolitical and FX risks are nothing new to MELI; they have grappled with these challenges for the past two decades yet have still delivered extraordinary growth. One can only imagine how much faster they could grow in a stable economic environment.

Greg ┃The Elevator Pitch's avatar

Clear approach! I like the OCF cleanup. It could be interesting to value separately the ecomm and finance biz as they carry different profiles.

Wolf of Harcourt Street's avatar

SOTP is another method you could explore, but I found that the financials lack sufficient granular information to reverse engineer a full historical P&L for e-commerce and financial services as a starting point.

Greg ┃The Elevator Pitch's avatar

Yeah that's fair. One way to do it would be to value the e-comm portion and historical fintech and see how much the credit is worth based on current price.

Jeremy: Learning to Compound's avatar

What did you considered to take out of the total OCF to give you 3.8 Billion. Provision of doubtful accounts and what else?

Wolf of Harcourt Street's avatar

I aggregated the following items: provision for doubtful debts, credit card receivables, payables and accrued expenses, and funds payable to customers.

Jeremy: Learning to Compound's avatar

Ahhh noted! That makes sense. Thank you.

notpy's avatar

OCF / 2 (adjusted then) and still undervalued 👀

Expected rev growth around 20% is always a problem. Any macro change and the stock price might correct heavily. Still watchlist

Thanks

Wolf of Harcourt Street's avatar

The macro environment in Latin America has been challenging for the past two decades, yet MELI has achieved incredible growth despite these conditions. One can only wonder how much more it could have grown in a stable macro environment.