Why MercadoLibre is a compelling e-commerce stock

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Free Mercado (NASDAQ: MELI) is by far the largest e-commerce company in Latin America. But its success has attracted attention and the competition is intensifying. Does the company have a defensible position against newcomers to the region? It does. In this segment of “The 5” on Motley Fool Live checked in September 30 Fool.com contributor Brian Withers explains why he loves MercadoLibre in the long run.

Brian Withers: I am thinking of the company that I guess I will choose for the moat issue is MercadoLibre, and I will choose it for several reasons.

First of all, it arrived on the table before everyone else. They were the first interregional actor in Latin America. If you look Amazon, they are in Brazil and now in Mexico. They’re really not in all the different countries where MercadoLibre is located. Limited sea happens and begins to affect a few countries. But MercadoLibre has been around since 1999.

It is still run by its founder, and four of the five members of the C suite have been there since 2000, so less than a year after starting the business. Not to mention all of the C-suite live in the area and are citizens of the area, a few of them have been country managers. Not only is the founder still there, but the founding team is still there.

It has invested heavily in its software infrastructure, physical distribution, and has a great, popular payment system to boot. There is not one thing, there is a lot of things. I think that’s what for me, that’s part of why MercadoLibre is my number one position, is that I think he has all of these things going for him.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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