Gamers are projected to spend $250 billion on video game products in 2023, with that figure forecast to expand at a compound annual growth rate of 10% through 2027 (per Statista). The industry hit some roadblocks over the last year as macroeconomic headwinds led to reductions in
Below is Validea's guru fundamental report for AMAZON.COM INC (AMZN). Of the 22 guru strategies we follow, AMZN rates highest using our P/B Growth Investor model based on the published strategy of Partha Mohanram. This growth model looks for low book-to-market stocks that exhibi
For the last couple of weeks investors have gotten their quarterly downloads for portfolio companies as earnings season is on full display. As usual, big tech garnered a fair amount of scrutiny given investor curiosity and expectations around artificial intelligence (AI). For Mic
A bull market isn't here yet, but it may be on the way. History shows us difficult markets always lead to better market times. And bull markets definitely are worth waiting for. The average bull market between 1926 and 2017 lasted six times longer than the average bear market and
E-commerce platform MercadoLibre (
NASDAQ:MELI
) has been among the hottest tech stocks in the past decade, creating significant wealth for shareholders. Since its IPO in August 2007, MELI stock has returned a staggering 6,347%, valuing the company at $69.5 billion by market cap. While shares of MercadoLibre have surged 66% in 2023, the stock is still down 32% from all-time highs, providing a dip-buy opportunity, in my view.
I remain bullish on MercadoLibre, as it is part of a rapidly expanding addressable market, allowing the company to increase revenue and earnings at an enviable pace in the next few years. Moreover, its widening portfolio of products and services should further diversify its revenue base, push profit margins higher, and act as a flywheel for MELI stock.
An Overview of MercadoLibre
MercadoLibre is an e-commerce marketplace operator based in Latin America. This includes the Mercado Libre Marketplace, which allows businesses and merchants to list merchandise online. There is also Mercado Pago, a financial services platform that facilitates online and offline transactions, providing a mechanism for users to facilitate digital payments.
Additionally, the company offers Mercado Fondo, where users can invest funds deposited in the Pago accounts, while it also has a vertical where MercadoLibre extends loans or credit lines to merchants and consumers.
How Did MercadoLibre Perform in Q3?
MercadoLibre is among Latin America's fastest-growing companies and has increased its revenue from $2.29 billion in 2019 to $10.54 billion in 2022, indicating a compound annual growth rate of 66.3%. In
Q3 2023, it reported revenue of $3.76 billion, higher than the
consensus estimate of $3.57 billion. Plus, total payment volume surged 121.2% to $47.3 billion, while gross merchandise volume grew by 59.3% to $11.4 billion in the September quarter.
MercadoLibre has invested heavily over the years to develop its products, allowing it to benefit from accelerated growth and consistent operating margins.
Despite a challenging macro environment, MercadoLibre's growth in items sold rose by 26% year-over-year in Q3, up from the 18% growth in the second quarter. These stellar growth rates meant MELI increased its revenue by 40% while operating income more than doubled for the fourth consecutive quarter to $685 million, indicating a healthy margin of 18.2%.
MercadoLibre is Latin America’s Amazon
MercadoLibre is quite similar to Amazon (
NASDAQ:AMZN
), serving millions of customers in Latin America. Like Amazon, MercadoLibre gained massive traction due to its online marketplace, which helped it enter new markets such as advertising, credit, and asset management.
These high-margin businesses allowed MercadoLibre to increase operating income by 131% year-over-year in Q3 while adjusted earnings also tripled to $7.16 per share, ahead of estimates, which stood at $5.86 per share.
Investors quickly noticed the resiliency of MELI's Credit business, as loan originations grew to $3.64 billion in Q3, up from $2.5 billion in the year-ago period. MercadoLibre is offering more significant loan amounts to businesses while maintaining sustainable delinquency rates.
Its Ad sales also grew by 70% to $200 million in Q3 and may be a key revenue driver for MELI stock in the upcoming decade. For reference, Amazon is currently the third-largest digital ad platform in the world due to the high purchase intent of its user base.
Just like Amazon Prime, MercadoLibre offers Meli+, which includes free shipping of products and subscriptions to streaming platforms, including Disney+.
What Next for MELI Stock?
MercadoLibre ended Q3 with 119.8 million active users and has enough room to keep growing at a rapid clip. According to a
Statista report, Latin America's e-commerce market was forecast to grow by 15.5% annually through 2025 (with 2019 being the starting point) due to rising internet penetration rates and higher income levels.
MercadoLibre's impressive growth rates have enabled it to consistently report profits, thanks to the benefits of economies of scale. An asset-light business model also suggests that its earnings will grow faster than revenue due to high operating leverage. For example, MELI's massive scale and increasing brand value could allow the company to lower its marketing expenses over time.
Is MELI Stock a Buy, According to Analysts?
Wall Street remains bullish on MELI stock, giving it a Strong Buy rating. Of the 12 analysts covering MELI stock, 10 recommend a Buy, two recommend a Hold, and none recommend a Sell. The
average MELI stock price target is $1,476.58, indicating upside potential of almost 7.4% from current levels.
The Final Takeaway
MercadoLibre is now a global tech giant and is positioned to deliver market-beating returns to shareholders. I believe that its capability to achieve strong revenue growth, coupled with enhanced profit margins and the advantage of economies of scale, positions it as a prime investment option.
Disclosure
Alphabet's Google is in talks to invest hundreds of millions of dollars in Character.AI, as the fast growing artificial intelligence chatbot startup seeks capital to train models and keep up with user demand, two sources briefed on the matter told Reuters.
It didn’t take Walmart WMT long after its disappointing quarterly report in May 2022 to regain its mojo. That quarterly report had laid bare the company’s failure to be ready for the post-Covid consumer world, resulting in invento
FuboTV stock (
NYSE:FUBO) is steadily advancing toward profitability, igniting optimism among investors about its investment potential. Despite consistently posting robust revenue growth, the sports streaming service's shares have faced challenges recently due to a lack of profitability. This has left investors rather disheartened. However, with the prospect of achieving a positive bottom line drawing near, FUBO's investment outlook appears more promising than ever. Consequently, I am bullish on the stock.
Industry-Leading Growth Metrics Despite Challenges
FUBO's Q3 results not only demonstrated remarkable growth metrics but also underscored its resilience in a challenging and saturated streaming landscape. It's a market where the main players like Netflix (
NASDAQ:NFLX), Disney (
NYSE:DIS), Amazon (
NASDAQ:AMZN), and AT&T (
NYSE:T) and their streaming divisions have struggled to impress lately. Even Netflix's Q3 results, which highlighted a resurgence in growth, still fell short of the outstanding figures the company once routinely achieved a few years ago.
The intense competition and the battle for consumers' attention have led to higher churn rates and a general lack of pricing power across the board. In contrast, FUBO, with its distinctive sports-oriented live SVOD model, has managed to transcend these challenges. The company posted revenue growth of 43% in Q3, reaching $320.9 million. This rate mirrored the strong momentum observed in the previous quarter.
FUBO's strategic emphasis on live sports has allowed it to carve out a niche in the market, even amid challenging conditions. Driving revenue growth was the 20% increase in subscribers, totaling 1.477 million. Revenue growth was further fueled by a substantial 17% rise in average revenue per user (ARPU) to $83.51, setting a new record for the company. In my view, these metrics unmistakably signify robust consumer demand for FUBO's services.
Additionally, a noteworthy highlight from Q3 was the North American segment generating $313 million in revenues, surpassing management's earlier guidance of $275 million. Consequently, management revised its full-year estimates upwards, now anticipating revenues in the range of $1.319 billion to $1.324 billion for FY2023. This represents a 34% increase at the midpoint, up from the previous range of $1.26 billion to $1.28 billion.
Robust Top-Line Performance Propels FUBO Toward Profitability
FUBO's robust top-line performance has propelled the company toward the eagerly anticipated realm of profitability, marking a pivotal stride for investors. The persistent challenge of attaining profitability had been a key factor in the stock's post-pandemic downturn. However, with management expressing confidence in an imminent end to losses and the company's latest results showcasing enhanced margins, investor faith in the stock has notably solidified.
FUBO's strategic implementation of stringent cost controls, coupled with top-line expansion, has resulted in a praiseworthy uptick in margins—a direct alignment with management's objectives. Notably, in Q3, the company's adjusted EBITDA margin underwent a substantial improvement, narrowing from -36.9% to -19.2%. This positive shift was driven by a remarkable 884 basis points expansion in gross margins to 6%.
Overall, I believe that this substantial improvement serves as compelling evidence that FUBO's business model is indeed scalable, dispelling past doubts on this front. While skeptics may raise concerns about the company's persistent losses, it is crucial to highlight the substantial progress made. Operating losses for the quarter amounted to $83.3 million, a noteworthy improvement compared to the previous year's figure of $103.6 million.
The pivotal question, however, revolves around the sustainability of these losses. Thankfully, fuboTV's management, in a statement during the Q3 earnings call, reassured investors by stating, "We closed the year with $266 million in cash…and we believe [we] have sufficient liquidity to fund our current operating plan as we progress towards our 2025 goal." This assertion strongly suggests that the need for additional capital is unlikely, mitigating the prospect of further dilution or damage to the balance sheet.
Is FUBO Stock a Buy, According to Analysts?
Regarding Wall Street's view on the stock, FUBO features a Hold consensus rating based on one Buy, three Holds, and one Sell assigned in the past three months. At $4.13, the
average FUBO stock price target implies 61.3% upside potential.
The Takeaway
In conclusion, FuboTV's steadfast journey toward profitability signals a promising outlook for investors. Despite challenges in a competitive streaming landscape, FuboTV's Q3 results showcased impressive growth metrics, highlighting its resilience and strategic positioning in the market.
The company's focus on live sports and robust top-line performance, coupled with improving margins, instills confidence in its
2025 cash-flow-positive plan. Along with management's reassuring comments, I can see FuboTV emerging as a bullish investment, shedding away earlier doubts and positioning itself for a promising future.
Disclosure
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Groupon GRPN reported a non-GAAP loss of 12 cents per share in third-quarter 2023, narrower than the Zacks Consensus Estimate of a loss of 16 cents. The company reported a non-GAAP loss of 68 cents per share in the year-ago quarte
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