Latin American e-commerce specialist MercadoLibre Inc. (NASDAQ: MELI ) Only 2022 saw a downward trend, and a new partnership could raise the stakes.
Earlier this month, the Argentina-based company’s chief financial officer told Reuters that MercadoLibre would begin processing business payments for WhatsApp users.
WhatsApp, owned Meta Platforms Inc. (NASDAQ: META ), offers free multiplatform messaging capabilities. Little known in America, but popular around the world among family members, friends and business associates living in various countries.
While users have long had access to functionality including text messaging and voice and video calling, payment processing will be a new feature.
MercadoLibre CFO Pedro Arnt told Reuters the two companies are testing the payment process in Brazil. “This will be an opportunity for us to effectively use WhatsApp to generate more sales and better customer interactions,” Arndt said.
“Seamless Checkout Experience”
A Company blog post, WhatsApp Brazil addressed the initiative, saying, “Ultimately, we want people to be able to pay securely by chatting with their credit or debit card. We recently launched this experience in India and are excited to test it in Brazil with several payment partners. This seamless checkout experience will be a game-changer for individuals and businesses looking to buy and sell on WhatsApp.
WhatsApp has been making in-app payments in India since 2020. The Brazil trial began in November.
MercadoLibre went public in 2007. In its early years it was viewed as equal eBay Inc. (NASDAQ: EBAY ) Or Amazon.com Inc. (NASDAQ: AMZN ).
The company has expanded its operational capabilities over the years and now includes a lending division and inland shipping operations. It also operates an advertising platform that allows users to list vehicles, ships, aircraft, real estate and services outside the Marketplace site.
MercadoLibre had more than 88 million unique users in the latest quarter, operating in 18 countries.
Strong earnings and revenue growth
Despite the poor share price performance this year, sales and earnings growth has been significant in recent quarters. MarketBeat analyst data for MercadoLibre With a price target of $1,317, that represents a 51.27% upside. A trend line connecting a series of recent price lows illustrates how the price may reach mid-2023.
Citigroup cut its price target to $1,050 from $1,150 following the company’s most recent earnings report on Nov. 3. Nevertheless, it still reflects optimism about the upside potential of 23.34%.
MercadoLibre’s three-year revenue growth rate is 74%. Sales have grown 45% to 111% over the past eight quarters.
The bottom line has been very erratic with losses in 2018, 2019 and 2020. Last year, the company returned to profitability, earning $1.67 per share. This year, analysts expect the company to earn $8.47 per share, up 407%, and next year is expected to rise another 63% to $13.78 per share.
That figure was revised higher recently, but not necessarily as analysts weighed the potential of the WhatsApp partnership.
Missed revenue views
Earnings data compiled by MarketBeat MercadoLibre has been missing for the past three quarters. Additionally, it missed top-line projections in one of those quarters.
MercadoLibre’s chart shows the first-stage platform launched in mid-August. Although working on the fifth week in a series of declines, it has corrected 31% so far. The stock has declined 10.69% in the last month and 7.76% in the last three months.
So far, the stock has held above its previous low of $600.68 in mid-June. However, by mid-day on Wednesday, shares were trading below both the short- and long-term moving averages. That means holding a rally that could make the stock an even lower-risk investment candidate.
In general, it’s better to focus on starting a stock rally rather than getting stuck in a slump.
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