Discover the Latin American e-commerce platform surpassing Amazon's performance this year.

• Amazon has experienced a growth of approximately 27% this year, while MercadoLibre, the Argentinian e-commerce and payments company, has seen a rise of 34%.
• In 1999, Marcos Gaplerin founded the company and it currently leads in online sales across Brazil, Argentina, Mexico, Chile, and other Latin American countries.
• "According to Galperin, the e-commerce penetration in Latin America is relatively low compared to other regions such as the U.S., Europe, and Asia, but it presents a huge opportunity."

As investors search for tech investments beyond the dominant seven companies, one of the world's largest e-commerce firms is gaining attention on Wall Street.

MercadoLibre, an Argentinian e-commerce and payments platform that's incorporated in Delaware and actively traded on Nasdaq, has experienced a 34% increase in 2024, compared to a roughly 27% rise for its competitors. The company was founded 25 years ago by CEO Marcos Gaplerin at the height of the dot com boom. Today, MercadoLibre dominates online sales in Brazil, Argentina, Mexico, and Chile, accounting for roughly half of online sales in South America. Additionally, the company operates a digital payments platform called Mercado Pago.

According to FactSet, 90% of Wall Street analysts who cover the stock have a "buy" rating, with an average price target of $2,268, which is about 8% above its current trading price. No sell ratings have been issued.

MercadoLibre's expanding profit margins and AI potential are reasons why Brad Gerstner of Altimeter Capital is excited about the stock.

"According to Gerstner, companies like MercadoLibre are often overlooked by investors as they focus on the Magnificent Seven. However, he believes that there will be numerous internet companies that will benefit from AI, particularly in areas of margin expansion and reacceleration at the top, where they can acquire customers, enhance their products, and simplify the buying process for customers."

Silicon Valley to Buenos Aires

MercadoLibre was conceived by Galperin while he was a student at Stanford Graduate School of Business in Palo Alto, California. Despite the scarcity of investment capital outside California at the time, he sought seed funding.

"According to Galperin, there was little venture capital available in Latin America and other regions outside of Silicon Valley. Even entrepreneurs in New York struggled to find investors, as they were all located on Sand Hill Road. Galperin believes that investors were not interested in exploring other parts of the world."

The investor mindset towards venture-backed companies in Latin America has shifted significantly. In 2021, the region raised a record $16.3 billion across nearly 1,000 deals, surpassing the previous year's total of $3.3 billion.

In the late 1990s, Galperin presented a private equity investor who was teaching at Stanford with an opportunity in Latin America due to the lack of infrastructure and competition.

""In Latin America, there was no existing infrastructure for online payments or efficient logistics for peer-to-peer commerce. We had to build everything from scratch, which made it challenging at first. However, it has become great for us today," Galperin said."

MercadoLibre, often referred to as the "Amazon of South America," was founded during a time when eBay was the dominant force in online commerce. At the time, Amazon was primarily an online book store. MercadoLibre partnered with eBay, which bought 20% of the company in 2001 and later sold its stake in 2016.

"Galperin stated that they learned a lot from their relationship and eventually pivoted away from auctions. He believes they are now much closer to what Amazon is today."

Amazon is also recognizing potential in South America, following its expansion into Mexico. "We've been competing since we started -- it's something that will continue for many years," Galperin stated.

Competitive tailwinds

MercadoLibre's revenue grew 42% in the second quarter and 112% on a currency-neutral basis, with an operating profit margin of 14.3%. The e-commerce and online payments market in Latin America is expanding, with a young, mobile-savvy population of over 600 million people.

"According to Galperin, the penetration of e-commerce in Latin America is still relatively low compared to other regions such as the U.S., Europe, and Asia. Approximately half of the population in Latin America is unbanked or underbanked, presenting a huge opportunity for financial product distribution to those who have been historically excluded."