Corona Effect: Mercado Livre Shares up 25 Percent after Positive Q1 Results

RIO DE JANEIRO, BRAZIL – The Mercado Livre Online marketplace company’s share price skyrocketed 25.46 percent at its highest on Wednesday, May 6th, after the company released its first quarter report.

As a result, the company’s market value exceeded that of Itáu, which amounts to approximately US$37.55 billion (R$188 billion). At 12.20 PM on May 6th, Mercado Livre’s shares were up 20.4 percent and traded at US$747 at Nasdaq. At the current price, its market value stands at US$37.31 billion.

According to the company’s results, its net sales, excluding exchange rate fluctuations, increased by 70.5 percent to US$652.1 million in the first quarter. In the period, the platform’s sales volume reached US$3.4 million, representing a 34.2 percent increase in the annual comparison.

Although social isolation did not impact the company’s delivery systems, demand decreased in the first days of quarantine, with a 1.4 percent drop in sales volume between March 18th and 24th. According to the company, part of this was due to the change in the type of consumption, which resulted in reduced sales of high-value products, such as electronics and auto parts.

However, sales gradually picked up again. In April, the growth rate of items sold hiked 75.8 percent and the volume traded was up 72.6 percent over the same period last year, excluding exchange rate fluctuations.

The financial result in Brazil, which represents 60.9 percent of the company’s total net revenue, increased 54.8 percent in reais and 31.4 percent in dollars. Mercado Livre also operates in Mexico and Argentina, where revenues in dollars rose 74 percent and 42 percent, respectively. The higher growth in these two countries is partly explained by the appreciation of the US currency, which was lower against the Mexican and Argentine peso than it was against the Real.

In terms of payments, growth was also sharp. In the first quarter, the single active user base in the Mercado Pago reached 43.2 million, – an increase of 30.9 percent. The volume of payments was up 43.5 percent in dollars, to US$8.1 billion. The growth of Mercado Pago outside the Mercado Livre sales platform was 84.2 percent in dollars and 139.5 percent in reais.

With yesterday’s bullishness, the company’s stock should reverse the year’s losses. Up until Tuesday, stocks were down 6.5 percent in 2020.

Source: Exame