MercadoLibre's Post-Election Stock Drop Looks Like a Buying Opportunity

MercadoLibre shares fell over 10% Monday after Luiz Inácio Lula da Silva defeated Flávio Bolsonaro in Brazil's presidential election, dashing investor hopes for a more market-friendly government. The decline reflects concerns about increased government spending and higher corporate taxes under the new administration. The company's Q2 results show domestic gross merchandise volume rose 39% year-over-year and items sold increased 56%, driven by broader customer engagement and better retention. Mercado Pago reached 88 million monthly active users, up 30%, with users of both marketplace and payments generating 70% more volume per user. Shares remain over 25% below their year-to-date peak, with operating margins declining to 6.7% due to investments in shipping and customer acquisition. The loan portfolio exceeds $16 billion with delinquencies near historic lows, though a weakening Brazilian economy could pressure credit quality.