MercadoLibre (MELI) Stock Plunges 7% Despite Strong Revenue Performance in Q1

Key Highlights

• Shares of MELI declined over 7% in extended trading following a first-quarter earnings disappointment
• The company posted earnings per share of $8.23, falling $1.14 below the Street’s $9.37 expectation
• Quarterly revenue climbed 49% from the prior year to reach $8.85 billion, exceeding projections by $530 million
• Unique buyer growth in Brazil accelerated to 32% YoY — marking the strongest expansion in half a decade
• The lending portfolio expanded 87% YoY to reach $14.6 billion, representing the biggest quarterly gain on record

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Shares of MercadoLibre (MELI) tumbled more than 7% during after-hours trading Thursday following the release of first-quarter 2026 results that failed to meet profit expectations, even as the Latin American e-commerce giant delivered its strongest sales performance in close to four years.

MercadoLibre, Inc., MELI

The stock had climbed 1.6% during normal market hours prior to the earnings announcement.

The company disclosed adjusted earnings per share of $8.23 for the quarter, undershooting analyst forecasts of $9.37 by $1.14. The result also trailed the previous year’s figure of $9.74.

Quarterly sales reached $8.85 billion, representing a 49% year-over-year advance and surpassing the Street’s $8.29 billion projection by $530 million. The growth rate marked the company’s strongest topline performance since the second quarter of 2022.

Gross merchandise volume across the platform increased 42% compared to the same period last year. Mexico experienced a 48% surge, while Brazil recorded a 54% gain. Overall payment volume advanced 50% to hit $87.2 billion.

Net profit totaled $417 million for the quarter, translating to a 4.7% margin. Operating income registered $611 million, representing a 6.9% operating margin. The company generated negative free cash flow of $56 million, largely consistent with the first quarter of the prior year.

MercadoLibre attributed much of its momentum to a strategic decision to reduce the free shipping threshold in its Brazilian operations. The move contributed to unique buyer growth of 32% year-over-year in Brazil — the fastest rate recorded in five years. Items sold jumped 56% YoY, significantly outpacing the 26% growth seen in Q2 2025 before the threshold adjustment took effect.

On a constant-currency basis, Brazil’s GMV expanded 38% year-over-year.

Financial Services Segment Maintains Strong Momentum

The company’s fintech operations continued their robust trajectory. Monthly active users reached 83 million, representing a 29% year-over-year increase.

The credit portfolio expanded 87% YoY to $14.6 billion — marking the largest quarterly increase measured in absolute dollar terms. Assets under management climbed 77% YoY to approach $20 billion.

Commerce segment revenue hit $5 billion, advancing 47% YoY. Fintech revenue reached $4 billion, growing 51% YoY.

Advertising revenue surged 73% YoY in dollar terms. MercadoLibre highlighted that its Mercado Ads platform has become the region’s fastest-expanding advertising business.

Company Deploys AI Technology in Search Function

During the first quarter of 2026, MercadoLibre launched its inaugural AI-powered search capability, fundamentally redesigning its entire search infrastructure around large language model technology.

The company indicated that moving beyond traditional keyword-based search enhanced product relevance for users in Brazil and Mexico, resulting in improved conversion metrics and stronger click-through performance for paid listings — both contributing to incremental revenue generation.

The $1.14 earnings per share shortfall relative to analyst expectations triggered the after-hours decline, despite the company’s revenue outperformance and generally solid operational performance across key metrics.

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