MercadoLibre posts record revenue as growth strategy weighs on profits
First-half net revenue climbs 50% to $19 billion, but operating income falls to $683 million as the company invests heavily in credit portfolio expansion.
MercadoLibre has reported its first quarterly revenue exceeding $10 billion, marking a significant milestone for the Latin American e-commerce and fintech leader. Net revenue rose 50% year-on-year to $19 billion in the first half of 2026, driven by a 44% increase in gross merchandise volume and a 56% rise in payment volume. Despite the top-line surge, the company’s strategic focus on long-term scale has resulted in a squeeze on near-term profitability.
Operating income fell to $683 million, while net income dropped 13% to $883 million. Management framed the narrowing operating margin as a deliberate trade-off, prioritising ecosystemic user engagement and market share over immediate financial returns. The company invested $2.1 billion into its credit portfolio and incurred $441 million in capital expenditures, leaving adjusted free cash flow at $214 million for the period.
The financial results highlight the value of users who engage with both the marketplace and Mercado Pago. These ecosystemic users generated 70% more gross merchandise volume and sold 55% more items per user than those using only the marketplace. Contribution profit per ecosystemic user runs at multiples above that of marketplace-only or fintech-only users, underscoring the strategic importance of cross-platform engagement.
MercadoLibre’s credit book reached $16.4 billion, up 75% year-on-year, with delinquency rates remaining near historical lows. The net interest margin after losses improved from 18% to 21% between the first and second quarters. However, the expansion into consumer lending has required the company to absorb higher loan losses, contributing to the pressure on operating margins which narrowed from 12.2% to 6.7%.
Investor sentiment reflects the tension between growth and profitability. The stock sits roughly 30% below its high, with a forward price-to-earnings ratio of 43.86 as of August 14, indicating the market is pricing in future growth potential. Hedge fund ownership slipped to 102 funds from 113 in the prior quarter, while short interest remained low at 1.60% of float, suggesting limited organised betting against the stock despite the pullback.
